China's New Policy Isn't An Automatic Bitcoin Mining Ban

A draft proposal from China's economic planning commission labels bitcoin mining as an industry that needs to be "Eliminated." But even if finalized in its current form, this would not automatically amount to an outright mining ban.

While local governments are supposed to follow the commission's guidance, to take action against an industry they need a basis in the laws of the state, not industrial policy.

The purpose of the catalog is to serve as a macro-level economic policy to guide local governments on how to allocate their investment and resources to balance local economic growth with overall stability.

Therefore local governments are required to take proper actions to implement what's outlined in the NDRC's policy guide.

The State Council emphasized at the top of the 2005 Interim Provisions that local governments, when implementing the industrial policy, are also required to balance the government guidance and the functions of the market as well as local interests.

Xu told CoinDesk that if the final form of the policy guide includes bitcoin mining as a category to be eliminated, it will be the job of local governments and relevant departments to implement actual executional plans.

Members of the local mining community have also raised questions about whether it's reasonable to label bitcoin mining as an industry to be eliminated, arguing that such a decision could potentially conflict with local interest.

Alex Ao, founder of Innosilicon, which manufactures cryptocurrency mining equipment, said in China's Inner Mongolia, Xinjiang and southwestern provinces like Sichuan and Yunnan, there is excessive electricity generated every year that can neither be fully consumed by local demand nor be integrated to the State Grid to be transmitted to regions outside.

Certain issues local governments in Hebei encountered when eliminating energy-intensive sectors such as cement manufacturing, following the 2005 policy guide.

The main questions that are now in the air is whether the final form of the policy will still include bitcoin mining in the "Undesirable" category, and if so, how lawmakers and local governments will carry out the implementation - especially when it conflicts with potential local interest.