I know that China banned mining. I know that Bitcoin is freedom money, and China is a communist country. But neither of these make China anti-Bitcoin.
It is not illegal to hold Bitcoin, manufacture mining machines, and host mining pools in China. I am sure that everyone can agree that mining is a pretty big part of the Bitcoin network, and China dominates this industry. It is estimated that over 90% of Bitcoin’s network hashrate is powered by Chinese-made mining machines (Bitmain, MicroBT, Canaan). It is harder to track, but roughly 40-52% of said hashrate is coming from Chinese-run mining pools.
The Chinese government itself is a large holder of Bitcoin, second only to the USA, at an estimated 190,000 (again, hard to track, as they may have liquidated some of their supply).
So why ban mining?
I believe China is perfectly fine with mining, just not with Chinese energy.
There even seems to be a kind of cold war starting between the US and China. The US has claimed Chinese-made machines are used for espionage, seizing them at the border for further inspection.
China has claimed the US hacked wallets and has circumvented Trump tariffs. Seems like a lot of trouble for something you have no interest in.
The reason I write this is not to claim that China is up to no good, or that we need to panic (although, as a US citizen, I hope we do not let China completely take over the mining industry). I am simply trying to counter what seems to be a widely accepted belief that China is not a player in the Bitcoin space because they banned mining in 2021.
These are just my thoughts. I enjoy debate, so please, if you do not agree, tell me why! Thank you for your attention to this matter.
China is highly focused on exports. And China makes most things better/cheaper than any other country and so it is with mining hardware- they can make mining hardware cheaper than anyone else. But when it comes to Chinese citizens holding Bitcoin I am not sure of the situation except that using Bitcoin as a P2P payment protocol is banned. A major part of the Chinese economic strategy that has been so successful is providing electricity at a low cost which then stimulates manufacturing and subsequent development. China leads the world massively in terms of electricity generation supply and energy efficiency technology. So the low price of electricity made China great place for mining Bitcoin but then the Chinese government appears to have felt threatened by the ability of Bitcoin to circumvent capital controls and the threat Bitcoin could pose to a CBDC. China is highly focused upon building global payments protocols outside of the USD/SWIFT network but Bitcoin (and Jack Mas Alipay) threatened the CCPs prefered protocol the CBDC Yuan. Jack Ma was sidelined and has been less prominent ever since. China understands the potency and strategic importance of money and monetary protocols. Bitcoin with its decentralised protocol gives superior monetary rights and principles to the individual but less so to the nation state- so China is not philosophically inclined toward Bitcoin- even if it could be a great alternative to the USD/SWIFT! China and Bitcoin are a fascinating topic- often written off but as you point out China is highly involved and its exact stance seems hard to exactly pin down. The alleged theft of Bitcoin by US secret services related to the Prince group scammers in Cambodia and earlier Chinese Bitcoin operators is a fascinating story I would like to know more about. One thing is for sure- Bitcoin is a strategic asset-it is neutral and treats all participants equally- maybe the Chinese should consider it as it could provide a great neutral alternative to the USD and Chinese miners would prosper given Chinas exceedingly cheap and abundant electricity power supply.
Firstly, you are by far the most informed person on this subject I have spoke to, so thank you.
I didn't know P2P payments were legally banned, I just figured no one used them because of the influence of the PBC. But I will have to look into that Jack Ma story, never heard of this.
It just seems as if the US and China, maybe Russia too, are just waiting for the other to make a first move. Not sure, maybe I just have more reading to do.
But the energy generation story is almost unbelievable. It is so bad that Trump had to manually inject fusion into the narrative. Definitely something to keep an eye on as time goes on.
I am curious what you think about Bitmain building in the US. How did they make it profitable to build here?
I dont know about Bitmain building (mining?) in the US but guess it was after China banned mining there and so they moved mining hardware to US? Regarding Jack Ma- the CCP has invested a lot in building their CBDC and other protocols which can enable trade payments outside of the USD/SWIFT system. Jack Mas alipay was seen as a threat to the CCPs preferred CBDC Yuan A major example is mBridge a system for digital trade payments which was initially under the BIS but last year BIS distanced themselves from it as it had reached a point of development where it had the potential to threaten the USD/SWIFT hegemony that BIS id part of. The original initiators of mBridge were China, Thailand, the UAE and Hong Kong. Since then many more have joined and currently many of them including the Saudis are readying digital currencies capable of being used in the mBridge protocol. A natrion need to adopt a CBDC within its domestic economy to enable trade payments via mBridge- it just needs a digital token equivalent to its domestic currency with which to participate- this is what many mBridge members are now readying. Parallel to this is Trumps response with is USD Stablecoins. There is definitely a contest to develop the digital trade payments successor to SWIFT and its primarily between USA and China.
The only story I know about China mining in the US was in Wyoming a Chinese owned farm was raising concerns because it was next to an Air Force base.
There is definitely a race to develop a digital payment system, and I know that the US is on a path to a stablecoin for their system. I have not looked into what has been going on in China with their payments system, but I realize now that I probably should have.
I agree with you that China should consider Bitcoin as a neutral settlement system. I think every country should consider it.
China have mBridge, CIPS and numerous shadow banking channels. Regaining control of Hong Kong really opened up the possibilities- Hong Kong being the portal via which Britain originally gained trade payments access to Chinese markets back in The Opium Wars era and since. China understands the importance of banking channels and how they run parallel to military structures. China is building both determined not to be subject to US sanctions and leverage. If they adopted Bitcoin it would be a lot easier for other nations to accept that China is not building its own monetary hegemony to replace that of the US.
So far Strategy is winning.
Yawn.
Yeah keep yawning. It's only a 3x lead.
If you say so.
the enforcement side of that equation is gonna get hectic, methinks
my theory on the dumps this year: china is selling a lot of future contracts with the goal of trashing bitcoin price so gold looks good.
Why would China pump gold price when they are accumulating gold faster than anyone else?
My theory is that China and its autocratic ideology blinds China to an excellent opportunity to embrace Bitcoin as a neutral and fair alternative to the dying USD.
In a world where Bitcoin becomes a significant reserve asset China would enjoy a significant strategic advantage as they generate a huge surplus of electricity and at a very low price/kw/h and China could easily and logically dominate mining if it chose to.
Maybe they are saving their surplus for AI dominance or more directly productive purposes as low electricity prices give Chinese manufacturing a huge strategic advantage over all other industrialised nations...but Bitcoin could be a great way to create a neutral alternative to the USD and one that many other nations could accept as neutral and immune from sanctions from any nation state.
Have you read this book?:
https://www.amazon.com/Would-Mao-Hold-Bitcoin-Techno-Nationalist/dp/B0D7672L8X
I'm reading it now.
I have read it, but I definitely will. Awesome recommendation!
In China Bitcoin always has been a grey area. I'm sure the CCP didn't enjoy seeing capital flow out of China via Bitcoin and into foreign property in 2017.
If they aren't anti-Bitcoin they aren't really pro-Bitcoin either.
I agree. I think they see it will have a role in the future, but know it will not work with their banking system.