China’s Miners Struggle to Pay Power Bills, Regulators Clamp Down on OTC Desks

[Hydrogen]

China dislikes bitcoin simply as they do not directly control it. That negative attitude towards innovation and progress they don't control will hurt their expansion efforts and dull their competitive edge. China has a crypto mining advantage, which they could succeed in losing. Thanks to their own hard work and effort. The same precedent could apply to other sectors. We know that their surveillance network limits travel and basic freedoms which will hamper job markets, invention and development. The USSR had many similar issues, one reason why many russians were enthusiastic about abandoning it. These negative ideological trends are often noted in china's economic growth and activity failing to meet expectations.

[DooMAD]

They knew the risk of taking up mining in an authoritarian, socialist country where you can get publicly executed in 21st century.

Should that not lead people to respect them more, though?

Ordinary people in authoritarian countries are taking a bigger risk than the majority of us to take part in this system, yet so many people living in relatively free nations give them nothing but shit for it because they don't like the leaders of that country.  I find it quite distasteful, personally.

[pixie85]

They knew the risk of taking up mining in an authoritarian, socialist country where you can get publicly executed in 21st century.

Should that not lead people to respect them more, though?

Ordinary people in authoritarian countries are taking a bigger risk than the majority of us to take part in this system, yet so many people living in relatively free nations give them nothing but shit for it because they don't like the leaders of that country.  I find it quite distasteful, personally.

There are of course different ways of looking at their situation.

We can either say: why are they even trying instead of showing their government the middle finger and leaving to start a business somewhere else? Why struggle and then pay taxes to the slave drivers that made it so hard to earn anything in the first place?

...or we can admire them for their diligence.

[bbc.reporter]

There is nothing strange in this news, if cryptocurrency trading has been banned in China for years, then OTC trading is not exempt from that either. For some reason, the Chinese authorities have only now decided to deal with such a way of selling BTC, thus making it clear to the miners that they are no longer desirable in the country.

I can agree with avikz that this may not be so bad, because there is a perception that there is too much Chinese influence on BTC mining anyway, and that we need more decentralization on that issue. Therefore, it is better for this to happen gradually than for some ban to happen overnight, which has always been an option - because there is no broad and lengthy debate under communism - they make decisions quickly and implement them even faster.

Agreed that this might only be a nuisance for Chinese miners in exchanging their coins to yuan. However, this also shows that it can become very concerning if your cryptocoin mining business depends on government regulated banks for the ability to pay electricity bills.

[Lucius]

So, if OTC is being cancelled in their country, does that mean they will not be able to transfer their btc outside their country in an otc deal and get their fiat? They can use many available fiat transfer models to receive Yuan in their account, the big deal though is the conversion rate of 2.5% (forex fee) and they may get less due to being helpless here.

China cannot ban anyone from making a BTC transaction, so any miner can sell their coins anywhere in the world. Even if the problem is not that they receive the earnings in their bank account, how will they justify that earnings to the authorities if trading with BTC is prohibited? The paradoxical situation is that they produce something that is forbidden to trade, and in order to produce it they use electricity sold to them by the state.

Why doesn't China stop the use of btc there totally if they do not want their citizens to get involved? Why are they imposing their own rules on miners? Where is freedom, then? 

The Chinese authorities have some of their own reasons for doing this, and it is completely frivolous to ask where freedom is - in communism, freedom is a rather unknown concept. You do what they tell you, if you rebel or create problems you go to a concentration camp or in a mass grave. I had the misfortune of living in a country that left behind over 1000 mass graves with over 1 million killed in the 45 years of communist rule.

[Bttzed03]

So I read an online article's title that basically says this is the reason why bitcoin is surging. The miners from China cannot offload their bitcoin I didn't bother to read the content of the article but if selling is done through OTC, it shouldn't be affecting the price. Right?

[bbc.reporter]

@Bttzed03. It would be the same because OTC traders sell their coins to the exchanges where there is much liquidity. This is a bull market whether the miners can or cannot sell.

In any case, good news or good rumor for the Chinese miners hehe. OKex CEO shall be released from police custody.

OKex is one of China's OTC trading desks for Chinese miners and their CEO was taken by police for accusations of money laundering. I do not have updates on their banking situation, however.

Also, there are rumors that Huobi's OTC trading desk is being investigated by police.



The exchange reported losing contact with Xu on Oct. 16 and was forced to suspend all trading account withdrawals, as CoinDesk reported at the time. Chinese media outlets reported Xu was in police custody but, speaking to CoinDesk, OKEx denied the investigation of Xu was related to money laundering.

Rumors started circulating on Twitter Wednesday that Xu has been or will soon be released from police custody.

Source https://www.coindesk.com/okex-token-okb-star-xu-release

[Tipstar]

I talked to one of my Chinese friend and things are getting really scary there. The authority used to not bother people for trading crypto and most of the people could easily buy, sell and trade crypto with their mobile. But with the recent crackdown, there's a growing frustration among the people. The policy in China is affected by the power struggle of the CCP and they assume things aren't going to change unless there's a large shift in power structure which they say is likely as a lot of people are unsatisfied with current leadership.

[wiss19]

What else are you expecting from a country with a government that doesn’t let them exercise their right in most situations? They have released their own cryptocurrencies and of course they will be expecting their Chinese citizens to be making use of the digital Yuan, and they will see Bitcoin as a threat to their own digital money that’s being released.

Anyway, that is not going to stop Bitcoin, Chinese people are not the only people that are mining Bitcoin, there are so many other countries where Bitcoin is being mined. With that said I still know for sure that what their government is doing is quite wrong, it would have been better if what they did was regulate it to avoid money laundering and all that, but banning it completely is something I don’t like at all.

[2double0]

Why doesn't China stop the use of btc there totally if they do not want their citizens to get involved? Why are they imposing their own rules on miners? Where is freedom, then? 

The Chinese authorities have some of their own reasons for doing this, and it is completely frivolous to ask where freedom is - in communism, freedom is a rather unknown concept. You do what they tell you, if you rebel or create problems you go to a concentration camp or in a mass grave. I had the misfortune of living in a country that left behind over 1000 mass graves with over 1 million killed in the 45 years of communist rule.

That is ridiculous on China's part and I am sorry, I forgot this that the country is under government control, a communist country it is. There must be something to save miners from going into the grave if their government is not helping them in any way, but are also not cracking down btc completely. Can't miners try to sell their btc and show it as freelance money received in their accounts? They can sell for PayPal or ask their trusted persons to send fiat to them via an e-currency provider against their btc.

[bbc.reporter]

I talked to one of my Chinese friend and things are getting really scary there. The authority used to not bother people for trading crypto and most of the people could easily buy, sell and trade crypto with their mobile. But with the recent crackdown, there's a growing frustration among the people. The policy in China is affected by the power struggle of the CCP and they assume things aren't going to change unless there's a large shift in power structure which they say is likely as a lot of people are unsatisfied with current leadership.

The Chinese government is not going after OKex and other bitcoin OTC trading desks. It is going after the money launderers who are using the OTC trading desks.

In any case, it has been confirmed that Star Xu has been released from police detention and unrestricted withdrawals from OKex will be allowed again.

I speculate that he might have begun to cooperate with the Chinese government to trace some questionable transactions.



Mingxing “Star” Xu, founder of OKCoin and CEO of OK Group, has resurfaced after being detained by Chinese police.

The exchange said in its announcement that it is preparing to allow “unrestricted withdrawals” by Nov. 27.

Source https://www.coindesk.com/okex-founder-star-released

[iTradeChips]

In my opinion, it will be considered a non-issue for many, and many would think that it will not really affect Bitcoin in any way. Many miners would be forced to shutdown their mining operations if they cannot bring everything to another country. China could not control Bitcoin that is why they are against it. Shutting down the OTC operations is disastrous for these miners. But as many would think, these miners should have other ways of communicating with the outside world and should have thought of other ways. But that is also another problem altogether. I think they is nothing else they can do but to go to another country.

[kryptqnick]

To be honest, I don't understand why mining businesses did not move out of China yet. Cheap electricity is one thing, but China is a very strict authoritarian country, and its attitude towards cryptos and mining has been unstable for a while. Sometimes the authorities there just don't care, but other times they're making it hard for crypto users. And yet if this map is correct (and Cambridge sounds legit to me), 65-70% of mining is still done in China. I wonder if there's at least a tendency of mining farms relocating or not.

[bbc.reporter]

In my opinion, it will be considered a non-issue for many, and many would think that it will not really affect Bitcoin in any way. Many miners would be forced to shutdown their mining operations if they cannot bring everything to another country. China could not control Bitcoin that is why they are against it. Shutting down the OTC operations is disastrous for these miners. But as many would think, these miners should have other ways of communicating with the outside world and should have thought of other ways. But that is also another problem altogether. I think they is nothing else they can do but to go to another country.

Read the news. This is not an attack on bitcoin, this is only an issue of money laundering operations using OTC trading desks and bitcoin. The banks have closed accounts of all cryptocoin users including the miners as casualties. The problem appears to have been resolved, however.