According to a new report published by Chinese crypto publication 8btc reporter Lylian Teng, a few publicly listed Chinese companies are secretly mining bitcoin. Further, in her two-part study, Teng states that the companies are mining bitcoin under the guise of cloud computing or providing mining hosting services.
China’s crypto regulations
Ever since 2017, the cryptocurrency activities have been under scrutiny in China. That’s the year when the government banned initial coin offerings (ICOs) and shut down cryptocurrency trading exchanges located in the country.
At the beginning of April 2019, The National Development and Reform Commission (NDRC) published the revised list of industries it wants to restrict or eliminate. Among activities that are considered to be unsafe, unregulated, or polluting the environment, cryptocurrency and bitcoin mining has its spot. Apparently, the NDRC’s opinion on mining is that it:
should be phased out as they do not adhere to relevant laws and regulations, are unsafe, waste resources and pollute the environment.
The public has a deadline May 7th to comment on the list.
What does this mean for bitcoin mining companies?
Limiting cryptocurrency mining in China meant that many mining companies had to find bases elsewhere. However, according to the above-mentioned report some companies simply kept on with bitcoin mining, but under the veil of mystery.
Chinese listed companies in bitcoin mining
To avoid the country’s regulations and bans regarding cryptocurrencies, certain Chinese listed companies have been mining bitcoin quietly. Hence, this means that they’re working under the guise of cloud computing companies or companies providing mining hosting services.
For instance, Huatie HengAn, a subsidiary of publicly listed company Huatie, lost over $23 million while secretly mining bitcoin under the guise of a cloud computing activities.
Another example is Wholeasy, a Chinese company operating as an Internet game company. According to the report Wholeasy contributed 17.7% of Ebang’s miner sales in 2018.
Also, the report states that besides these companies, RHY, a Chinese bitcoin mining and mining hosting provider, has been building mining farms in countries like Iran. Apparently, one of the reasons why Chinese mining companies and miners have been moving to Iran, are affordable electric prices at $0.006 per kilowatt-hour.
But, RHY isn’t the only one. Xincailiang is a Chinese company dealing with case planning and big data traffic distribution in the field of mobile games. Or that is what official version says. However, the report tells us that Xincailiang has built crypto mining farms overseas and offers miner host services.
According to the report, one of the reasons for going abroad is concern about being compliant:
It is tough for Chinese companies to conduct bitcoin mining operations both at home and abroad, but they have advantages in capital, talents and other resources over bitcoin mining startups, their only concern is to be compliant. In such a context, go overseas is a possible solution for them.
The fact is that Chinese mining companies face numerous difficulties conducting bitcoin mining operations at home. Moreover, the government is tightening its grip on cryptocurrencies, and the companies have no choice but to mine bitcoin quietly or to go overseas.