Chinese Authorities Change in Attitude to Crypto Mining Industry after US Export Ban
ZTE Corporation, China’s second-largest manufacturer of telecommunications equipment, will not be able to import components made in the USA after the Commerce Department announced a ban last Monday. In this situation, cryptocurrency mining industry could be seen as a breakthrough solution.
As a multinational corporation, ZTE sells communications equipment all over the world. However, 99% of the core components for the infrastructure of the telecommunications networks as well as its smartphones are import from the United States. Last year, ZTE spent $260 billion USD to import 337 billion chips. So, it’s clearly that if ZTE cannot find other suppliers, the chip shortage would lead to a breakdown of its business.
At this time, cryptocurrency mining industry becomes the redeemer for the domestic chip market in China. The cryptocurrency mining machine also requires large amount of chips. Chinese cryptocurrency mining hardware manufacturer giants are also developing their own chips. Since the ban was announced on April 17, Bitcoin Cash (BCH) started to surge about 70 per cent in 7 days. As we all know, most of the Bitcoin Cash mining power is centralized in China, the price surge shows some investors are optimistic about Chinese mining pool.
Chinese authorities’ attitude also changed after the ZTE ban. On April 23, Chinese financial authorities announced their stance on ICOs and cryptocurrency exchanges at a conference, saying that ‘ICO projects and crypto trading platforms have safely exited from mainland China.’
On one hand, it shows Chinese regulator authorities believe that currently, there has no significant risks in this market and majority of the financial activities in this industry are acceptable. On the other hand, it also can be as a sign that Chinese government may plans to get involved in and guide enterprises in this market. This announcement is used to affirm policies made in the past and also admit the rationality of the current market.
April 24, Jiang Yang, Vice Chairman of the China Securities Regulatory Commission conducted an site visit to Canaan Creative (Avalon). Jiang emphasized that no matter what the chip is used for, Canaan is a “chip company” and expressed the hope that Canaan would be listed in the domestic market. Prior to this, Canaan has struggled but finally gave up its debut on China’s NEEQ.
Due to the effect of government intervention, developing domestic chip manufacture industry would becomes a national strategy. Which means chip-related companies, especially the digital currency mining industry do not have to worry too much about the regulatory crackdown any more.