Rumors of Power Cancellation to Chinese Bitcoin Mining Operations Disproved

The alleged cutting off of the power supply was actually just inaccurate wording.

On Tuesday, a report saying that Chinese power companies would allegedly cut off the electrical supply to Bitcoin mining rigs made its rounds on the internet. Later on the same day, however, it was revealed that the reports may have been an unintentional stretch of the truth.

The Statement was Originally Intended as an Internal Memo

The confusion began when Sichuan Electric Power company issued a public statement declaring Bitcoin mining to be an “illegal activity” and that power providers in the Sichuan province needed to cease the provision of power to Bitcoin miners or else face legal consequences. Sichuan has been a popular location for Bitcoin mining due to the low costs of electricity there, which is driven by the fact that much of the region’s electricity comes from hydropower and wind.

The statement, which was entitled “An Emergency Notice on Banning Bitcoin Production”, was spread around the internet on Tuesday. According to an unnamed executive at the Sichuan Electric Power company, the statement was inaccurately worded and not originally intended for a public audience.

Rather, the statement was drafted as an internal memo that would eventually be distributed to small generators in the Sichuan region who had “violated agreements with the State Grid to prioritize power supplies for local residents before businesses”, according to a report by Caixin Global. Dutch Bank ING recently reported that the electricity required to mine a single Bitcoin is enough power to run an entire house for a month.

Caixin Global also reported that the same unnamed executive reaffirmed that “we are a company, rather than an administrative entity that has the power to determine whether bitcoin mining is legitimate or not.” Rumours of a ban on cryptocurrency mining originally circulated in late September along with rumors that the crypto bans would also extend to over-the-counter Bitcoin trading.

Censorship and Control in China: Cryptocurrency and Beyond

While this alleged mining ban ended up being just a rumor, China has taken a rather hostile stance toward Bitcoin and cryptocurrency in general. In September, the country rolled out a set of crypto-related bans that shut down domestic crypto exchanges and made ICOs illegal.

The truth of the rumor was not hard to imagine from a government that is already in the practice of going to what many consider to be extreme lengths to prevent its people from accessing something that cannot be controlled by its very nature. The usage, mining, and ownership of cryptocurrency, which is not controlled by any central entity, provides Chinese citizens with a level of economic empowerment that the Chinese government seems to be at the very least uncomfortable with.

In the past, China has famously banned its citizens from both Google and Facebook; the Chinese government has also limited its citizens’ access to other websites that it regards as threats to its power, including Wikipedia, YouTube, and Twitter.

Chinese Internet Companies Must Sign Self-Regulation “Pledge”

According to the American Council on Foreign Regulations (FCR), the Chinese government has a host of tactics for internet censorship. The FCR reports that internet companies based in China are required to sign the “Public Pledge of Self-Regulation and Professional Ethics for China Internet Industry”, a 31-article document outlining the Chinese government’s rules for internet behavior.

Additionally, the Chinese state has received very poor rankings in terms of freedom of the press. According to the CFR, “Freedom House ranked China last for the second consecutive year out of sixty-five countries that represent 88 percent of the world’s internet users.” Reporters Without Borders, a watchdog based in France, placed China at #176 out of 180 countries in its in global index of freedom of the press.

In the midst of the series of bans on crypto that China rolled out during the month of September, co-founder of Horizon State Jamie Skella tweeted a few words of advice: “As the old saying goes: ‘Anything that China bans, invest in.’ 2009: Facebook. 2010: Google. 2017: Entire Crypto Ecosystem?”

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