China completely banned cryptocurrency mining activities in 2021, which dealt a devastating blow to China's local cryptocurrency industry, which attracted global attention and discussion that year. Recently, Professor Wang Yang, Vice President of the Hong Kong University of Science and Technology, suddenly said that this decision was "very unwise" and not only damaged China's position in the blockchain and cryptocurrency fields, but also allowed the United States to seize the initiative.
Before the Chinese ban, more than two-thirds of the world's mining activities for cryptocurrencies such as Bitcoin and Ethereum were concentrated in China. But since China implemented the ban, the world's top mining companies have moved their operations to the United States, such as Antpool and F2Pool. Currently, the United States has become the world's largest cryptocurrency mining center, accounting for 51% of the global computing power. China's previous share of the first place has been replaced, falling to 19.9%.
Wang Yang is an internationally renowned scholar who has done extensive research on China's blockchain industry. In 2020, he became the Vice-President (Institutional Advancement) of the Hong Kong University of Science and Technology and concurrently a Chair Professor of the Department of Mathematics. He has published more than 100 research papers in the two fields of pure mathematics and interdisciplinary mathematics, many of which were published in top scientific journals.
Professor Wang Yang believes that China's ban policy not only failed to achieve the expected results, but also allowed the United States and other countries to take advantage of the situation and quickly become the new cryptocurrency center. The US media once published an article saying that the ultimate result of China's ban is to drive miners to the United States and contribute tax revenue to the United States. At present, there are at least 4 billion US dollars in tax dividends. As the world's largest economy, the United States has already dominated the fields of science and technology, finance, etc. Now that it has gained the first opportunity in the cryptocurrency industry, it will undoubtedly further strengthen its dominant position in the global economic landscape.
Moreover, China's ban has also brought serious obstacles to the development of Web3 in Hong Kong. As an international financial center, Hong Kong should have played an important role in the field of Web3, but due to bureaucracy and cumbersome supervision, Hong Kong has obstacles in keeping pace with the international community in this field. Wang Yang called on Hong Kong to reform its bureaucracy and create a more favorable environment for the innovation of blockchain technology and applications in order to seize the development opportunities of Web3.
Wang Yang personally suggested that instead of driving away the miners, Chinese state-owned enterprises should be allowed to invest in mining farms, which would not only increase tax revenue, but also more effectively manage and monitor mining activities. Instead of worrying about capital outflows and other issues, it would be better to allow mining to generate profits. For example, each mining farm should have at least 20% of state-owned enterprises involved, which would solve the funding problem and also ensure risk control.
In addition, if Trump wins the 2024 US election, China will most likely need to re-evaluate all relevant cryptocurrency policies in a short period of time. At that time, the Chinese cryptocurrency market may be reopened. There will be a breakthrough in about three years, that is, everyone will rethink what cryptocurrency is and whether it should be embraced.
At that time, China's regulation of the cryptocurrency industry should match its control over cybersecurity and financial stability. We should not suppress an emerging industry out of fear of illegal activities, but seek a balance between development and regulation. China may learn from the United States and create a more favorable regulatory environment for the cryptocurrency industry while ensuring security, so as to seize the development opportunities of this emerging industry.
Meanwhile, Bolivia recently lifted its years-long ban on cryptocurrencies, sparking speculation and expectations about the country’s crypto policy. In 2020, Bolivia was one of the few countries to completely ban cryptocurrencies. But after experiencing events such as economic inflation and international war, the Bolivian government realized the huge development potential of cryptocurrency technology and decided to reopen the market this year.
Currently, this policy change has brought new business opportunities to Bolivia. Some cryptocurrency companies have expressed their intention to enter the Bolivian market and plan to establish local operation centers. Experts believe that Bolivia can take advantage of its rich natural resources and low electricity costs to develop into a regional cryptocurrency center.
So, will China also follow Bolivia and relax its control over cryptocurrencies? Judging from recent developments, this possibility is not great. The Chinese government has always been cautious in regulating cryptocurrencies. Although cryptocurrency mining was banned in 2021, cryptocurrency trading and use were not completely banned. The pilot of China's central bank digital currency (DCEP) is also progressing steadily, which shows that the Chinese government has not given up participating in the digital currency revolution. Therefore, it is still difficult for China to significantly relax its control over cryptocurrencies in the short term.
However, we cannot completely deny the possibility that China will relax its cryptocurrency policy in the future. After all, with the rapid development of the global cryptocurrency market, if China continues to maintain strict control, it will easily lose the initiative in this emerging track. In addition, major economies such as the United States and Europe have begun to actively embrace cryptocurrencies. If China does not make appropriate adjustments, it is likely to be at a disadvantage in the future digital economy competition.
Although there are recent reports that China is studying to relax its regulation on cryptocurrencies, the specific policy details have not yet been announced, so just listen for now. However, industry insiders believe that if China eventually decides to lift the ban, China is fully capable of regaining its dominance, becoming a leader in the Web3.0 digital economy, and leading the development of global cryptocurrencies.
In general, China's previous mining ban has had a great impact on the global cryptocurrency landscape. Now, whether China should actively embrace the development of blockchain technology and strive to become a new cryptocurrency power is worthy of serious consideration by relevant departments. After all, under the current global landscape, if China continues to insist on blockade, it may lose important development opportunities. In the future, after weighing the pros and cons of the development of digital currency, it is not impossible for China to appropriately relax control. Let us continue to pay attention to the latest developments of the Chinese government in this field.
