Status: 02/23/2021 1:47 p.m.
In China, almost two thirds of all bitcoins that are on the market worldwide are mined – still tolerated by the state. Trading in cryptocurrencies is no longer allowed. The government has its own plans.
By Birgit Eger, ARD-Studio Shanghai,
currently in Cologne
China is the world’s largest producer of bitcoins. Hardly anyone in this country knows company names like Bitmain or MicroBT, but they are among the largest manufacturers of cryptocurrencies internationally. The re are two main reasons that have made China a paradise for modern Bitcoin miners in the past: low energy prices and cheap hardware.
Cheap electricity, fast computers
Chinese computers created around 65 percent of all Bitcoin computing power last year. The y are mainly found where energy is particularly cheap: in the north, in Inner Mongolia, for example. Coal and wind power produce a lot of electricity there – for a few consumers. This also applies to the provinces of Sichuan and Yunnan in the southwest. Here, mainly hydropower supplies the cheap energy.
Not only the low energy prices, but also the proximity to computer manufacturers is another reason for companies in China to mine cryptocurrency. Because the country is the world’s most important manufacturer of IT equipment, including high-performance computers, which can solve the arithmetic tasks for Bitcoin mining.
Central bank plans its own currency
Every now and then, the Chinese Bitcoin companies have their electricity cut off – but less for lack of energy than for political reasons. The government in Beijing is uncomfortable with the cryptocurrency. Many Chinese have used digital money in the past to circumvent the strict capital export rules: large sums of renminbi were exchanged for Bitcoin and later exchanged for dollars and euros abroad. That is why the Chinese government has now banned Bitcoin trading.
Instead, the central bank is working on its own digital currency. CBDC, “Central bank digital currencies”, is the name of the new currency and is not actually a crypto currency, because it is not based on the so-called blockchain technology, with which, for example, bitcoins are mined. The Chinese market is too big for cryptocurrencies, said Li Lihui, former president of the state-owned Bank of China, to the Chinese Internet portal Sina Finance. He emphasized that the planned Chinese digital currency was more reliable and safer than Bitcoin and Co.
Insight into the finances
The Chinese central bank will spend the new money – and thus gain direct insight into the customers’ financial data. From a technical point of view, CBDC is another digital payment method such as “wechatpay” or “Alipay”, which are already used everywhere in China. In order to test the new digital currency, 200 digital yuan (equivalent to around 25 euros) were given away for free in four cities last year.
A final evaluation of the project is still pending. The plan is to introduce the new currency CBDC nationwide by the end of 2021. Bitcoin mining will continue to be tolerated until then. Nevertheless, Bitcoin producers are slowly turning away from China: In Central Asian countries such as Kazakhstan, Bitcoin production is even cheaper.