Inner Mongolia Introduces Enforcement Measures for Crypto Mining
Following Beijing’s renewed call for a crackdown on Bitcoin mining last week, the Inner Mongolia region has issued a 8-point measure to combat cryptocurrency mining.
The document is in line with the outcome of the 51st meeting of the Financial Stability and Development Committee of the State Council to combat Bitcoin mining and trading behavior, its authorities point out. It also forms a part of the region’s several safeguards for ensuring the completion of the “14th Five-Year Plan” energy consumption dual control target.
The draft “Eight Measures of the Development and Reform Commission of Inner Mongolia Autonomous Region on Resolutely Combating the Punishment of Virtual Currency “Mining” Behavior” is meant to “build a long-term regulatory mechanism, maintain market order, the big data industry environment and prevent financial risks,” it says.
The document is now open to the public for comments.
The draft resolution states that the preferential policies enjoyed by large data centers, cloud computing enterprises and other entities will be canceled should they be found carrying out crypto mining activities; telecom and internet or other entities that engage in crypto mining will have their licences revoked; and activities of business places like Internet cafes found mining cryptocurrencies would be suspended.
It also notes that enterprises, individuals and other subjects caught in “illegal acts such as money laundering in the form of virtual currency” or “acts such as illegal fund-raising using virtual currency” shall be prosecuted. There are also punishments for “relevant enterprises and related personnel that have engaged in the act of “mining” virtual currency” and those “who participate in or provide convenience and protection for virtual currency by using their positions.”
Those running crypto mining projects that have not been approved for private access to power supply will be prosecuted for illegal theft of electricity in accordance with the criminal law of China and other relevant laws and regulations, it adds.
“How do we know a computer is mining?” asks Bobby Lee, the co-founder at BTC China exchange when asked of his view on the development after his presentation at the ongoing Consensus 2021. “To enforce it would be difficult.”
He adds that announcements of sorts by the authorities to present Bitcoin mining as illegal may embolden community members to report seeing such activities. And since their activities are physical, miners tend to become fearful and could make them end up leaving China for other parts of the world for their operations.
There have been reports of miners already migrating from China to eastern Europe and North America. One of such is BTCM, a Chinese company listed on the Nasdaq, which recently announced an investment of US$9.33m to build a 100mw mine in Kazakhstan. It also says it is cooperating with another Kazakhstan mine to host a 60mw mining operation.
“It’s all about the enforcement. China hardly changes the rules,” Lee says. “The actual law doesn’t change. They are just going to step up the enforcement.”
He adds that while the announcements are meant to signal enforcement changes, they are not new. Rather, he maintains that his long term views about Bitcoin would not be affected by the development like it would impact new crypto investors’ perception of the market as some will be scared by it while some others could see it as an opportunity to buy cheap.
Lee also noted that Bitcoin will not merely succeed because of China alone but because of its main competitor: fiat currency. As long as fiat currencies are as they are, Bitcoin will surely succeed, he said.