META 1 Coin Reports

Why China Continues to Fight Cryptocurrency

Why China Continues to Fight Cryptocurrency

As you get more familiar with the cryptomarket, you will inevitably experience some days that are losses. There are many reasons for sudden losses of value including regulatory developments, major hacks, and fraud. However, it’s becoming more frequent that Chinese crypto crackdowns are behind sudden market turns. Here’s a quick glimpse into why and how China continues to fight cryptocurrency innovation within its borders.

China Crypto Statistics

There was a time, not too long ago, when China was the epicenter of the crypto market. The nation housed the largest mining operations and its citizens were exposed to Bitcoin early on. Notably, it’s a Chinese corporation,, that owns 140,000 BTC. The firm controls around 0.667% of the total supply which makes it one of the largest private owners of Bitcoin in the world.

China Mining

China also dominated the mining sector for much of Bitcoin’s early years. Even now, the nation is home to four of the largest mining pools in the world. F2Pool, Poolln, Huobi Pool, and AntPool represent a large percentage of the network’s hashing power. For example, one 2019 study found that Bitcoin miners in China accounted for almost 80% of all Bitcoin mining energy consumption.

Chinese miners have had an advantage over the competition. The country provides cheaper electricity when compared to the competition. This low cost electricity is the result of a combination of cheap energy due to subsides and renewable energy options such as hydroelectric, solar, and geothermal.  As such, the country has always had a strong influence on the market due to a centralization of mining efforts.

No Crypto for You

Despite the obvious innovative benefits and public demand, Chinese officials continue to follow an antic-crypto approach for the public while at the same time expanding their own blockchain efforts. Chinese officials have disguised these crypto smear campaigns in multiple ways.

Regulators originally clamped down on cryptocurrencies stating they were being used to conduct illigel activities. They then stated that the technology could help users evade the country’s strict national controls on capital. Recently, officials have gone as far as calling decentralized currency a “big financial risk” to the nation’s stability.

All of these concerns have been echoed by other country officials around the globe. However, none of the other nations taking an anti-crypto stance remain such a dominate force in the market. Additionally, none have achieved the level of development China has accomplished in terms of Central Bank Digital Currency roll outs.

Digital Yuan

Chinese officials recently began issuing a Central Bank Digital Currency (CBDC) called the Digital Yuan. CBDCs borrow the trackability and efficiency of decentralized networks but remove all of the decentralized components. The results of these actions are a digital currency that can be monitored, issued, and edited in a more streamlined manner than the current digital fiat options available.

The Digital Yuan has seen some impressive adoptions since the launch of its pilot program this year. For example, there were 140 million wallets opened in 2021. Also, Digital Yuan users completed +62 billion in transactions so far.

Notably, Chinese regulators chose to roll out the Digital Yuan in a staggered approach that saw certain cities become illegible for a lottery. Issuers handed out 300,000 red packets to the lucky winners amongst 1.3 million lottery participants in May of this year. Interestingly, red packets are a traditional way to gift loved ones in the country.

2017 ICO & Exchange Crack Down

The Chinese crypto crackdown officially began in late 2017. At that time the market was a very different place. The industry was in the middle of the ICO (Initial Coin Offering) boom. Initial Coin offerings enable companies to access public funding in a more secure, efficient, and open manner when compared to IPOs (initial public offerings).

The introduction of the ERC-20 token standard boosted market activity greatly. This was the first time that companies could launch tokens without the need to create new blockchains to support their projects. Instead, they could leverage Ethereum’s mainnet.

Aside from ushering in a flood of new projects, these developments drove innovation in China as platforms like NEO entered the market in a bid to compete against Ethereum. The combination of miner centralization, innovative developers, and huge gains by investors brought crypto directly into the crosshairs of regulators.

The hype and sudden flow of currency in and out of the country without oversight drove Chinese regulators to take some drastic measures. The first thing the regulators did was begin to talk negatively about the technology. Then, these groups moved to ban all local crypto exchanges. This maneuver was followed quickly by a complete ban on ICOs not backed by the state.

China Declares All Crypto-Transactions Illegal

Anyone who has recently followed Chinese crypto developments can attest to the fact that they are not improving. As the country’s CBDC nears full adoption, Chinese authorities have upped their anti-crypto rhetoric. Most recently, the country’s environmental regulators called crypto mining extremely harmful.

These regulators announced plans to begin a major clampdown on cryptocurrency mining operations in the country. The group seeks to locate and raise the electricity prices on commercial mining facilities. Also, the regulators intend to reexamine the role of state-owned businesses in the industry as part of the country’s goal to go carbon neutral by 2060.

Effects of Chinese Crypto Crackdowns

The effects of the Chinese crackdowns have been interesting. For one, the news resulted in an uptick in investment capital leaving the mainland. This capital flight can be seen when you examine the growth of neighboring countries in the industry. For example, Kazakhstan saw its numbers boost to represent 18.1 percent of Bitcoin’s mining electrical consumption. Notably, for the first time in history, the US overtook China in terms of Bitcoin mining energy consumption in 2021.

It’s a Hard Sale

It’s going to be difficult to get the cat back into the bag in regards to the advantages and freedoms that cryptocurrencies bring to the world. Chinese officials can pass harsh anti-crypto laws but as long as the country remains a huge market for decentralized currencies and pursues its crypto ambitions, its efforts will always look more like an attempt to retain control rather than a genuine effort to protect citizens. As such, projects like META1 and Bitcoin will continue to provide more open and democratic financial systems to the world.

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