The government of China has decided not to discourage and eliminate the cryptocurrency mining industry. This is a change from a draft earlier this year. The National Development and Reform Commission (NDRC) of China published new guidelines for local governments in which they list which industries they encourage, restrict or want to eliminate. The commission no longer mentions cryptocurrency mining on the elimination list.
The updated list follows an draft published in April. Seven months ago the NDRC considered the crypto mining industry to be unfavorable. However, the list by the NDRC would never be a direct ban on mining. It’s a guideline for local governments to allocate investments, balance resources and create economic stability. However, local laws and needs overrule the recommendations by the commission.
The NDRC has been changing its recommendations every few years. They started doing this in 2005 and label every industry with an advice: encourage, restrict or eliminate. Most industries that are on the elimination list use obsolete techniques, products or technology. In addition they can be unlawful, unsafe, wasteful or polluting the environment.
China is home to some of the biggest companies in the cryptocurrency mining space. Take Bitmain, Canaan and Ebang for example. These are among the biggest manufacturers of cryptocurrency mining hardware, an industry that’s already worth billions of dollars.
No recommendation either
Even though the president has been in favor of pushing blockchain technology, the NDRC makes no mention of blockchain, cryptocurrency or crypto mining at all. However, in the list of favorable developments the commission does make mention of ‘smart energy systems’, ‘efficient water distribution’, ‘distributed power supply’ and other similar systems that would greatly benefit from using blockchain technology. Yet the NDRC makes no mention of cryptocurrency mining on the list of favorable industries. At least the industry is no longer in danger of being banned.
In October Chinese president Xi Jinping placed lots of emphasis on blockchain technology for the future of his country. For example, he wants to increase investments into the sector to ‘accelerate the development of blockchain technology and industrial innovation’. In addition China passed a new set of guidelines for companies operating in the field of cryptography. The new law needs to encourage research and development on commercial cryptography technologies in China. They believe that standardization will help the blockchain market to grow.
Also published on Medium.