An extraordinary reveal has come to light in the world of Bitcoin mining – it turns out that mining was never actually banned in China. Despite reports from Reuters and other mainstream news outlets claiming otherwise, Chinese miners have been leading the world in innovative uses of Bitcoin mining.
The network hashrate did drop significantly, from 179.2 EH/s to 87.7 EH/s, which seemed to confirm the narrative of a ban on mining in China. However, upon closer inspection, it was revealed that mining was merely suspended, not banned.
Investigative reporting uncovered that the Chinese policy document from September 2021 did not actually legislate a ban on mining, but rather a moratorium on new mining sites. The policy signaled an intent to eventually grandfather existing mining facilities, which has yet to happen.
Interviews with players in the Bitcoin mining industry revealed that miners in China are actively encouraged by authorities to help solve energy challenges. They are using positive environmental externalities of Bitcoin mining, such as heat recycling and stranded renewable energy monetization.
The original suspension of mining operations in China was primarily due to concerns about capital flows out of the country and the use of coal-based mining, which endangered emission targets. By allowing smaller, renewable energy-based mining operations to resume, China is able to stabilize grids and monetize wasted renewable energy without the risk of large capital outflows.
Overall, the narrative of a ban on Bitcoin mining in China was found to be inaccurate, with mining operations continuing in various regions of the country. The situation in China sheds light on the complexities of the Bitcoin mining industry and the intersection of energy policy, environmental concerns, and economic factors.
