China has reversed their stance on cryptocurrency mining within the country, leaving the door open for increased clarity and competition. The Chinese government had previously included “virtual currency mining” on the list of banned items in the Catalogue of Industrial Restructuring Guidelines that will be enforced from January 1, 2020. This morning, virtual currency mining was removed from the website, as brought to public attention by Dovey Wan, founding partner of Primitive Ventures, November 6, 2019.
China Gaming the Global System
The impact that China has on global trade is undeniable, and in tandem, their ability to sway the crypto market with mere rumors and statements is indisputable. China is, by far, the only sovereign entity with this much influence over the market, mostly because a majority of Bitcoin’s miners reside there.
Revoking the mining ban proposal is unprecedented, but is not all that surprising given the recent buzz around China. In fact, this is probably the single most catalytic affair that has come out of the China saga this week.
Bitcoin is the king of the cryptocurrency market, which means anything positive or negative for Bitcoin moved the market accordingly.
People attributed the price pump last week to President Xi Jinping’s comments about blockchain. However, it now seems likely that there was a demand overflow in the country from insiders who knew this move was going to happen.
This narrative makes sense as price pumped a couple of hours after President Xi’s comments. As though Chinese residents – and other market participants – were readily awaiting this announcement with fiat loaded on their crypto exchange accounts.
Intentions Around Blockchain
Speculation is running amok when it comes to what China could possibly admire about blockchains. After all, transparency and distributed information are not inherently associated with the Chinese state.
China is undoubtedly trying to set up something on a global level. The last decade has made it clear that Russia and China will do whatever it takes to oppose American hegemony over trade.
Only time will tell what exactly China sees in blockchains, but the majority opinion is that it will be used to easily propagate unilateral information from residents to the government.