A corrupt Chinese official was prosecuted and investigated for supporting companies in cryptocurrency mining. The case offered some clues on what prompted China’s ban on crypto mining. Three days after the prosecution, the Chinese government plans to launch another sweeping crackdown on large-scale mining operations.
The world of blockchain moves fast, and nowhere does it move faster than China. Here’s what you need to know about China’s block-world in the week of Nov. 10 to Nov. 16.
Corrupt Party officials and mining
A senior provincial Chinese official was prosecuted for abusing his power by setting up enterprises to mine cryptocurrencies, according to an official announcement made this past weekend. Xiao Yi, the former vice-chairman of Jiangxi province’s CPPCC (Chinese People’s Political Consultative Conference, a political advisory body), was fired and expelled from the Party for “violating laws and Party disciplines,” according to a Nov. 13 announcement from the Central Commission for Discipline Inspection, an internal organ monitoring corruption and other wrongdoings among Party members.
In 2017, Xiao led a group of officials to visit Germany, facilitating a $1.69 billion deal to set up a “supercomputer computing service center” between a Fuzhou high-tech zone, Genesis Mining (a mining company in Germany), and Chuangshiji Technology (a company in Fuzhou city). Xiao was also the Party Secretary of Fuzhou city in Jiangxi province (not to be confused with the capital of Fujian province). The project later turned out to be a large cryptocurrency mining center.
Since 2018, Genesis Mining and Chuangshiji have gotten into legal disputes over half a million items of crypto mining equipment that could be worth about $200 million, according to The Block. Chinese courts ruled in favor of Genesis Mining in June. Chinese journalist Colin Wu reported that some in the industry believe that the legal disputes might have contributed to China’s decision to ban crypto mining in June. (The Paper, in Chinese and Cointelegraph)
More crackdown on crypto mining
On Tuesday, the Chinese government said during a news conference that it will begin another rectification of large-scale industrialized crypto mining activities. China’s National Development and Reform Commission (NDRC) said the country will focus on cracking down on large-scale mining centers, mining centers backed by state-owned enterprises, and bitcoin mining centers. The government may impose punitive electricity charges on entities if they are found to be mining. The NDRC also said crypto mining is an illegal financial activity and has a “severe adverse effect” on China’s goal of achieving carbon neutrality by 2060. (China Star Market, in Chinese)