The Chinese government has officially included cryptocurrency mining in its list of industries that should be eliminated. China’s state planner, the National Development and Reform Commission (NDRC), in its communication No. 49 dated December 30, 2021 but made public this week, notes that the decision had “been deliberated and adopted at the 20th committee meeting on December 27, 2021.”
It says its decision on the amendment the Industrial Structure Adjustment Guidance Catalogue (2019) to add the (loose English translation) “Production Process Equipment and (18) Others which reads virtual goods coin ‘mining’ activity” in the elimination category has been “promulgated and shall come into force on the date of issuance.”
The build-up somewhat started in April 2019 when the NDRC sought public opinion on a revised list of industries to be encouraged, restricted or eliminated. Bitcoin and crypto mining were on the list. However, by the time the final version of the document was published by November of the same year, nothing related to crypto mining was mentioned. No reason was given for this decision.
Between May and September 2021, China’s once blossoming crypto mining sector experienced a shake up that ended in a complete ban across the country and a drastic drop in China’s share of global hash power contribution.
The NDRC had in October 2021 released a document to indicate that China has added crypto mining to a draft list of industries to be either restricted or prohibited. The notice made investing in crypto mining business in China – as from that point – an off-limit venture for both Chinese and foreigners.
Hence the latest decision won’t come as a total surprise but could be considered a closure on China’s push to cut off the engagement in any form of crypto-related mining activity within its borders. The recent crypto ban has been described by some market insiders to be China’s most severe crackdown on the crypto industry yet.
In compliance with the regulatory policy, businesses associated with the crypto industry in China including exchanges (especially those with roots in China), mining companies and pools, altered their operations with some choosing to shut out Chinese users, shut down their business completely or relocate.
Meanwhile, the move gave others outside China the opportunity to grow as reflected in the earnings and production updates from some crypto companies. The ban didn’t stop top miner makers in the country – particularly Canaan and Bitmain – from their drive to meet market demands and sustain their operations though. It also did not stop some Chinese companies from venturing newly into the sector.
Last week, China Xiangtai food company which engages in agricultural business announced that it is expanding into the crypto mining sector through its U.S. subsidiary SonicHash LLC. It says it entered into a purchase agreement for 686 spot Bitcoin miners worth US$6 million to ramp up its hash rate generation by over 63,000 TH/s. The aim is for a total mining operations of 1,428 Bitcoin miners producing approximately 132.2 PH/s.