Category: China

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CBDCs China Crypto News

It’s Official – Chinese CBDC Will Be Controlled by Smart Contracts

The People’s Bank of China (PBoC) has issued a whitepaper outlining the progress of China’s CBDC, formally called e-CNY. The document, released on July 16, reveals the e-CNY uses smart contracts programmability as part of one of its seven major features.

E-CNY obtains programmability from deploying smart contracts that don’t impair its monetary functions. Under the premise of security and compliance, this feature enables self-executing payments according to the predefined conditions or terms agreed between two sides, so as to facilitate business model innovations.

PBoC whitepaper

Implications of “Programmable Money”

This is the first time that the PBoC has clarified the use of smart contracts. But two researchers of the PBoC’s digital currency research lab have stated contrary opinions on the programmability layer of the e-CNY.

Mu Changchun, head of the research lab, and Fan Yifei, vice governor of the central bank, said the digital yuan could support smart contracts to boost its performance as a currency, but beyond a currency, smart contracts could “undermine the renminbi by adding extra social or administrative functions”.

The Chinese View of Smart Contracts

The PBoC believes in “state-led innovation” and that the issuance of a digital currency such as the e-CNY belongs to the state. The currency is a centralised, two-tier system that uses distributed technology.

The right to issue e-CNY belongs to the state. The PBoC lies at the centre of the e-CNY operational system. It issues e-CNY to authorised operators which are commercial banks, and manages e-CNY through its whole life cycle. Meanwhile, it is the authorised operators and other commercial institutions that exchange and circulate e-CNY to the public.

PBoC whitepaper

Moreover, the report didn’t fail to criticise cryptocurrencies and the rise of altcoins, saying the intrinsic volatility of crypto represents a huge risk to the stability of society and financial security.

Cryptocurrencies such as bitcoin are claimed to be decentralised and entirely anonymous. However, given their lack of intrinsic value, acute price fluctuations, low trading efficiencies and huge energy consumption, they can hardly serve as currencies used in daily economic activities. In addition, cryptocurrencies are mostly speculative instruments, and therefore pose potential risks to financial security and social stability.

PBoC whitepaper

CBDC Research, Development and Trials

In 2017, the same year the crypto market began one of its rallies, the PBoC created a task force to study and research the use cases and properties of a CBDC, while also seeking advice from several international organisations.

Since then, the Chinese government has carried out several domestic trials. In June, authorities in Xiong’an, a region southwest of Beijing, announced that salaries of residents would be paid in digital yuan.

The e-CNY has been put to the test in multiple Chinese locations through 20 million retail e-CNY wallets. As of June 30, the number of transactions exceeded 70 million, totalling 34.5 billion yuan (US$5.3 billion).

Meanwhile, as Crypto News Australia reported earlier this month, the Reserve Bank of Australia has also been conducting research on implementing a CBDC.

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Blockchain China Crypto News Cryptocurrencies Cryptocurrency Law

Censorship Freedom: Hong Kong Newspaper Launches on the Blockchain Using DeFi Protocols

Hong Kong activists are scurrying to preserve the back catalogue of pro-democracy newspaper the Apple Daily by uploading thousands of articles onto the censorship-proof blockchain platform ARWeave.

ARWeave is a decentralised file storage platform that breaks down a file into bits of information distributed over an open network of anonymous computers around the world. It describes itself as a “collectively owned hard drive that never forgets“.

After a 26-year run, the Apple Daily was forced to cease publication on June 23 after being targeted by a national security crackdown for breaching “vaguely formulated offences“ as China’s grip over free speech tightens.

Five Executives Arrested, Assets Frozen

Last week, 500 officers raided the newspaper’s headquarters, going through reporters’ notes and other journalistic material. Police froze assets of companies linked to the Apple Daily and arrested five executives.

Following the raid, the Apple Daily closed its website and erased all its social media platforms. In anticipation of popular demand for its final print run, the paper printed 1 million copies, more than 10 times its usual run.

Staff members of Apple Daily and its publisher Next Digital with the final edition at the paper’s headquarters in Hong Kong, June 24. REUTERS/Tyrone Siu

Democratic Leaders Condemn Closure of Apple Daily

The shutdown is the most serious blow yet to Hong Kong’s media freedoms. US President Joe Biden described it as “a sad day for media freedom in Hong Kong and around the world“, adding that the Apple Daily had been “a much-needed bastion of independent journalism in Hong Kong“.

British Foreign Secretary Dominic Raab asked China to respect the agreement signed in 1997 committing to continue allowing free media in Hong Kong after the colony’s reversion to China from British rule.

We certainly view what’s been happening with the closure of the Apple Daily and the arrest of journalists very, very seriously. We call on China to respect the terms that it freely signed up to and we think that’s a matter of trust as well as important for the people of Hong Kong.

Dominic Raab, British Foreign Secretary

Apple Daily owner Jimmy Lai has been behind bars since last December over unauthorised rallies during Hong Kong’s mass pro-democracy protests in 2019. Lai is facing three national security charges, including colluding with a foreign country, and is already serving several jail sentences.

As the fight for free speech in Hong Kong continues, blockchain technology is playing a vital role in advocating for human rights in China – providing a platform where repressed citizens can resist centralised power by accessing decentralised networks that are immune from state censorship and impossible to silence.

New Blockchain Platform LikeCoin Embraced

Programmer Kin Ko has been building a decentralised registry called LikeCoin, which helps internet users identify metadata (creator, date, time, location, version) of content through a unique code called an International Standard Content Number (ISCN), similar to a book’s distinctive International Standard Book Number (ISBN). Any changes made to content would be recorded and tracked through a digital fingerprint. LikeCoin has been embraced by pro-democracy activists such as Citizen News, already using the platform to catalogue its online images.

The open-source transparency and immortality of blockchain technology poses a grave threat to those in power in China, who are desperate to keep authoritarian control over the narrative of the country’s media.

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Bitcoin Bitcoin Mining China Crypto News

Chinese Mining Businesses Migrate to Kazakhstan Amid the Crypto Crackdown

Canaan, a major ASIC miner manufacturer, and BTC.com, the fifth-largest Bitcoin miner group, are moving into China’s backyard, with particular focus on the Central Asian country of Kazakhstan.

As the crackdown on cryptocurrencies in China continues, so does the migration of miners looking to other parts of the world where they can set up shop. Today, political stability, regulatory clarity and respect for private property rights are the most important criteria for miners.

Miners Look to New Options

With confirmed bans in multiple regions including Xinjiang, Inner Mongolia, Sichuan and Yunnan, miners are looking for new options. One of BIT Mining’s data centres (part of the BTC.com mining pool) received a notice from the Sichuan State Grid informing it that the grid would cut its power supply by June 19. In response, the company expects to have 2600 Bitcoin miners shipped to Kazakhstan by the start of July.

Over the coming quarters, it plans to ship its remaining mining machines to other data centres outside of China. BIT Mining has also invested US$25 million in a new mining centre in Texas.

Following our investments in cryptocurrency mining data centres in Texas and Kazakhstan, we are accelerating our overseas development for alternative high-quality mining resources.

Xianfeng Yang, CEO of BIT Mining

Canaan the Latest Mover

Chinese ASIC manufacturer Canaan has also decided to set up a base in Kazakhstan, where it plans to diversify its mining operations.

One of the main considerations for these businesses moving from China is the high cost of transporting equipment halfway across the world. Miners need a place with existing infrastructure capable of supporting the needs of these types of businesses.

Some Operators Are More Cautious

Besides the country’s relative proximity, this is a contributing factor in moving to Kazakhstan as it is expected to host several other crypto mining firms in the future. Some operators, however, are more cautious.

I think Kazakhstan has already hit a sort of ceiling as to how many miners can move into the country.

Alejandro De La Torre,  Poolin vice-president

The US is a second option for miners who can afford it. States such as Texas, Mississippi, Tennessee and Florida have already indicated their openness to migratory miners. 

Categories
Bitcoin Mining China Crypto News Regulation

Why China Closing Bitcoin Mining Operations is a Good Thing

Various factors have been impacting Bitcoin, some of which are due to the ripple effects caused by negative press, heavy regulation, and bans implemented by China.

Bitcoin’s hashrate is one of its most important metrics. Essentially, it is an indication of the processing power of the Bitcoin network. The higher the hashrate, the faster transactions are verified and blocks can be created.

China’s Continual Crackdowns

China currently accounts for roughly 65% of the Bitcoin hashrate. Previously many miners set up shop there because of cheap energy and hardware prices. Additionally, the ability to use excess energy from sustainable sources like hydro power in Sichuan was a positive reason to mine there.

However, during 2021 there have been multiple instances where Bitcoin (BTC) and the crypto market at large have been affected by uncertain regulatory conditions in China. Just last week, the Bitcoin hashrate dropped nearly 17% after a crackdown in Sichuan where power was cut to 26 mining farms.

In April, outages in Xinjiang cut Bitcoin’s hashrate by 30% and contributed to a US$10,000 decline in Bitcoin’s price. But since Xinjiang ordered several crypto mining farms to shut down on June 9 -one of several shutdown orders across the country – it now seems that China is intent on shooing miners out of the country.

Why Redistributed Hashrate is Good News

Firstly, mining difficulty automatically adjusts as per protocol adjustments in the code, which neutralises the effects of less (or more) mining rigs coming on/off-line. This means that the network won’t be heavily affected by the hashrate drop for long.

While there will be a rough patch as Bitcoin re-establishes the lost hashrate out of China, once that is rebuilt there will be many positives to come from this.

Bitcoin mining will become more decentralised, since China holds the majority of the hashrate. Heavily adopting South American countries like El Salvador could pick up some of the slack, along with the increase of sustainable mining operations in the US. This will also lead to Bitcoin miners in other countries becoming more profitable, as they will be able to buy mining rigs from China since there is a worldwide shortage, and because Chinese miners will no longer be using them.

Bitcoin miners around the world could get cheap mining rigs from China sellers if they decide not to relocate. If China ends up completely banning crypto, it will end the continual FUD regarding China’s centralisation of Bitcoin; China using dirty energy to mine; and China’s continual threats to ban Bitcoin, which affects the market.

Miami Enticing Banned Bitcoin Miners

As the government crackdown heats up, Chinese Bitcoin miners are looking for a new home. Places like Texas and Miami, Florida in the US have been shaping up in order to cater for Bitcoin miners by adjusting their laws and regulations around crypto.

Miners want to set up in places with zero regulatory/political uncertainty. As Wayne Lin, founder of Chinese venture capitalist Axia8 Ventures, has stated: “I wouldn’t want to spend millions of dollars setting up my facility if the policies could change suddenly.”

We want to make sure that our city has an opportunity to compete […] We’re talking to a lot of companies and just telling them, ‘Hey, we want you to be here.

Francis Suarez, Miami Mayor

Suarez is promising near-limitless supplies of cheap nuclear energy and a stable home. He told CNBC: “We understand how important this is […] miners want to get to a certain kilowatt price per hour. And so we’re working with them on that.”

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Bitcoin Bitcoin Mining China Crypto News

Nvidia GPU Prices in China Fall Amid Bitcoin Mining Crackdown

Mining rigs of a super computer are pictured inside the bitcoin factory 'Genesis Farming' near Reykjavik, on March 16, 2018. - At the heart of Iceland's breathtaking lava fields stands one of the world's largest bitcoin factories at a secret location rich in renewable energy which runs the computers creating the virtual currency. (Photo by Halldor KOLBEINS / AFP)

Nvidia graphic card prices in China have fallen as much as two-thirds on Chinese e-commerce websites following the government’s crackdown on cryptocurrency mining.

As per a June 21 report by the South China Morning Post (SCMP), medium to advanced card prices fell on various e-commerce websites after Sichuan officials ordered the shutdown of several crypto mining facilities. The Nvidia Quadro P1000 model, an entry-level graphics card, was priced at 2,429 yuan (US$376) on JD.com, a popular online retailer in China.

The Asus RTX3060, which is a more advanced card, dropped from 13,499 yuan to 4,699 on June 21 on JD.com-operated online retailer site Tmall.

Mining Companies Pushed Overseas

Some miners plan to relocate from Guangzhou to US state Maryland, moving three tonnes of Bitcoin mining machines, according to a tweet from CNBC representative Eunice Yoon.

Xinjiang, Inner Mongolia and Sichuan were the three biggest provinces for crypto miners thanks to cheap electricity. But these areas have become hostile environments despite miners using hydroelectric energy instead of coal. This has pushed BTC mining companies overseas, some now looking at North America, Central Asia or South America.

One of the most attractive alternatives for miners is South America, which is becoming a mining hub as more countries follow El Salvador’s decision to make Bitcoin legal tender and facilitate BTC mining with wasted geothermal energy.

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Bitcoin Mining China Ethereum

Sichuan Officials Order Shutdown of Crypto Mining Facilities

According to Chinese media reports, the government of Ya’an – a city in the Sichuan region – has started shutting down crypto mining operations by force and redeploying the hydroelectric plants used to power them.

The news follows that of the China crackdown on Bitcoin mining we reported on a few weeks ago.

Ethereum Hashrate Down By 7%

The government order has apparently caused Ethereum’s hashrate to drop by 7%. It’s safe to assume the hashrate of Bitcoin has also gone down – although at the time of writing, there was no data to back this up.

The cease-and-desist orders started going out on June 18 as the local Ya’an government decided that the hydroelectric power being used to fuel these mining farms could be put to better use elsewhere.

A total of 26 big-league mining plants were identified and shut down. Although lesser mining farms seem to have been passed up by the order, it’s unclear whether these smaller operations will be allowed to remain open.

There are many small and medium-sized hydropower stations in Yunnan, Sichuan, and it may be difficult for them to receive government supervision. However, large-scale projects will be shut down in the short term.

PANews, China

Hydropower Means Green Energy is Not an Issue

This isn’t about green energy, either – according to Jiang Zhuoer, the founder of mining pool BTC.Top, all crypto miners in Sichuan are running their operations off hydropower. This mirrors the overall situation across China, where up to 90% of mining operations allegedly run on hydropower as well.

Following the document served on June 18, law enforcement agencies immediately began to shut down the identified mining operations. Furthermore, a report to local government authorities is due on June 25 regarding the success of the operation.

This could mean one of two things:

  • First, it could mean the government simply wants to see the exact impact of large-scale mining operations on the local power grid, after which a more permanent decision can be taken
  • However, this could also mean the mining operations have shut for good – and that the requested report is merely a formality.

With China shutting down its mining operations, we may see other countries such as the US and El Salvador take up the hashpower by running eco-friendly crypto mining operations.

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China Crypto News Payments Stablecoins

China’s Xiong’an Region To Pay Salaries in Digital Yuan CBDC

Following last year’s CBDC tests – including free digital stablecoin “red envelopes” handed out to residents – China is continuing its tests to determine the usefulness of CBDCs.

The government of Xiong’an – a region situated 100km southwest of Beijing and known for acting as a testing ground for new technological developments across China – has announced that the salaries of certain residents will be paid in digital yuan, also known as renminbi (RNB).

Construction Workers’ Salaries Paid In Digital Yuan

The digital RNB salaries will be paid mainly to construction workers – at least for now. On payday, batches of RNB will be transferred from the construction company’s public wallet registered with the PBOC to the private wallets of workers.

The CBDC test run will be coordinated by the Shijiazhuang branch of the People’s Bank of China (PBOC), and will be supported by Xiong’an’s reform and development bureau management committee.

In order to carry out the test, the Chinese government designed an app based on the Blockchain Fund Payment Platform, which will assign a digital ID to each person taking part in the experiment.

In closing, the report states that the government will also be looking into ways to ensure workers can use their CBDC without the usual hassle of finding merchants that accept payment in new cryptocurrencies.

Other Countries Looking Into CBDCs

CBDCs, or Central Bank Digital Currencies, are tentative experiments being carried out in China, the EU, Ukraine, Australia and elsewhere that would bring the technological advantages of blockchain to the central banking system.

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China Crypto News Regulation

Market FUD Again As Chinese Social Media Blocks Crypto Content

As concerns continue to build about the repression of cryptocurrencies in China, the tolls are visible in the market as crypto opinion leaders have their accounts blocked.

After the news of “Key Opinion Leaders” (KOL) accounts being banned on Weibo, the price of Bitcoin (BTC) and various other cryptos took a sharp dip. The Fear, Uncertainty, and Doubt (FUD) cast on crypto by the Chinese government has released quite a few Bitcoins from individuals fearing to lose their money.

Social Media-Inspired Volatility

When reports of the blocked accounts hit around 5:30am ET (about 9:30 UTC), it triggered a drop in the price of most major cryptocurrencies. The plunge seen in the following price chart of Bitcoin starting at that time sent ripples through various other major cryptocurrencies.

BTC price chart 5 June [Trading View]
Drop during news launch of multiple cryptos [Trading View]

This is not the first time China’s social media platforms have purged influential accounts related to cryptocurrency. In 2019, Weibo banned the accounts of Binance co-founder Yi He and cryptocurrency entrepreneur Justin Sun.

However, does banning a few Weibo accounts actually mean anything? As of less than a week ago, the US also had a ban on crypto advertising on social media, which it has only recently revised.

Beijing’s Logic

According to the South China Morning Post last month, Liu He, Chinese President Xi Jinping’s top economic adviser, said the government would “crack down on Bitcoin mining and trading behaviour, and resolutely prevent the transfer of individual risks to society”. The Chinese government’s reasoning is that one of the risks cryptocurrencies pose is how easily the market can be influenced by individuals.

As Colin Wu, a Chinese journalist who runs a cryptocurrency news site, posted to Twitter: “The accounts blocked by the Chinese government are mainly recommending investment and trading crypto to retail investors.”

“The government makes it clear that no Chinese version of Elon Musk can exist in the Chinese crypto market,” says NYU Law School adjunct professor Winston Ma.

This shows the Chinese government doesn’t need more uncertainty than influencers already bring to the table.

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Bitcoin Bitcoin Mining China Crypto News

Déjà vu – China Crackdown on Bitcoin Trading and Mining

China’s State Council Calls for Crackdown on Bitcoin Trading and Mining

It seems like history is repeating itself once again as the Chinese authorities have reiterated plans to crack down on Bitcoin trading and mining activities in the country.

Upon the news, the price of Bitcoin dropped by 10 percent below $40,000 USD late on Friday and is still on the decline as we reported in the reasons why Bitcoin crashed.

This isn’t the first time China has caused FUD with Bitcoin, they did almost exactly the same thing back in 2013 causing the Bitcoin price to drop from $1k to $400. China then did the same thing again in 2018 causing the Bitcoin price to drop from $20k to $6k.

China FUD since 2017

China Ban Bitcoin Mining Operations

Following the report shared by the Chinese journalist, the State Council of China, and Vice Premier Liu, He is looking to step up regulatory measures to protect the financial systems while also preventing individual financial risks. This was discussed in their 51st meeting of the “State Council Financial Stability and Development Committee” of May 21. 

This is the first time that the highest level of the Chinese government has clearly proposed a blow to the mining industry.

Crypto reporter, Colin Wu

As part of the measures, the State Council intensified their call to crackdown Bitcoin trading and mining in the country and “and resolutely prevent the transmission of individual risks to the social field.”

China houses the majority of Bitcoin’s global hashrate. Over 65 percent of Bitcoin mining activities are observed in the country, and so, some people are curious about how the Chinese ban on BTC mining will affect the overall network health.

Monthly share of global Bitcoin hashrate. Source: CBECI

On the other hand, some believe the development will propel more Bitcoin mining activities in the United States with clean energy.

We reported that China was clamping down on Bitcoin mining operations back in March, forcing F2Pool to sell off their BTC.

Categories
Bitcoin China Crypto News

China Sees Bitcoin as an “Investment Alternative” Say High-rank Officials

After almost five years of harsh regulations regarding the issuance of cryptocurrencies, it appears that China has shifted the tone on Bitcoin, calling it an “investment alternative”.

China’s former Central Bank governor, Zhou Xiaochuan, and Li Bo, current deputy governor, shared their thoughts about the future role of cryptocurrencies in the financial system.

We regard Bitcoin and stablecoin as crypto assets… These are investment alternatives. […] They are not currency per se. And so the main role we see for crypto assets going forward, the main role is investment alternative.

Li Bo at the Boao Forum for Asia

Crypto Could Play a Major Role in the Future

China has been known for having a harsh stance against crypto assets. In 2017, local authorities closed several crypto exchanges and banned initial coin offerings, causing immediate price drops.

It seems their stance has softened, as the country is currently studying Bitcoin and other assets — while maintaining current regulations.

We believe that crypto assets should play a major role in the future, either as an investment tool or as an alternative investment. Many countries, including China, are also studying it as an investment tool.

Li Bo

China Is Studying a New Regulatory Environment

The two officials said the authorities would maintain the current legislations for crypto assets. Due to the market’s inherent volatility, China is studying what kind of regulatory body there should be to avoid financial risks.

If it is used as an investment tool, many countries, including China, are also studying what kind of regulatory environment should there be for such an investment method. Although this regulatory  rule is the minimum regulatory rule, there are still regulatory rules.

Li Bo

On the other hand, Xiaochuan said people don’t need to know the technology behind digital assets or whether they are decentralised because they don’t understand it. He added that whatever the use case for cryptocurrencies, they should not be used for illicit activities such as tax evasion or money laundering.

The Market Slowly Recovers

These comments were well received by the community after the crypto market crashed on the weekend. As reported, Bitcoin and most altcoins suddenly tumbled, wiping $310 billion USD from the market, liquidating over 1,300,000 traders.

The market is currently recovering. Bitcoin managed to stay above $55,000 USD, while other currencies like Binance’s BNB and ETH recovered 20% and 10%, respectively.