Could The New “China Model” Be The Reason The Country Banned Bitcoin Mining?
August 10 2021 - 10:02PM
NEWSBTC
What is the new “China Model”? And why would that country ban an
industry that made them the ultimate leaders in the most important
development in recent times? The world is still scratching its
head. There has to be something else to this story. Is it only
control that they want? Or does China have a secret plan nobody’s
been able to figure out? We at NewsBTC have been studying the case,
looking for clues, reporting on related news. After the ban, when
Bitcoin’s hash rate collapsed, we posed Bitcoin Magazine’s Lucas
Nuzzi’s theory that it all had to do with the Digital Yuan, China’s
CBDC. Then, we found out Chinese entrepreneurs are selling small
hydropower stations and wondered if decommissioning them was part
of their plan. After that, the shocking reveal that China’s
dominance over Bitcoin mining was already waning before the ban
raised more questions than answers. The fine people at Bloomberg
might’ve found new clues by tackling a related but different
question. In the article titled “The China Model: What the
Country’s Tech Crackdown Is Really About,” they pose a theory about
the reasons behind their attack on Alibaba and DiDi. Two of China’s
giant unicorn tech companies, also world leaders in their
respective fields. Bloomberg thinks that, after following Silicon
Valley’s footsteps for years, China is trying a new model. Do they
have a case or do China’s motives remain a mystery for us
westerners? Keep reading to find out. What Does The New China Model
Consists Of? The article starts by summarizing what happened when
Uber-clone DiDi and “Alibaba’s fintech offshoot, Ant Group Co.”
tried to do public in the United States. The Chinese government
started actions against both companies. Alibaba’s Jack Ma
disappeared from the public eye as a result. “Just
because you are a highly successful tech company does not mean you
are above the CCP,” says Michael Witt, a senior affiliate professor
of strategy and international business at Insead in Singapore. “Ant
Group and Jack Ma found that out for themselves last year, and it
is surprising DiDi did not get the message.” What does this “China
Model” have to do with Bitcoin mining? Well, the Chinese government
seems to be cracking down on everything huge and technological that
isn’t aligned with their interests. And we in the industry know how
much Bitcoin those immense mines were producing. “China is actually
taking the lead in setting some boundaries around the power of Big
Tech,” says Thomas Tsao, co-founder of Gobi Partners, a venture
capital firm based in Shanghai. “People are missing the bigger
picture. They’re trying a new model.” Is Size the Problem For The
Chinese Government? As we learned when we analyzed the “The Death
Of China’s Bitcoin Mining Industry” article, China only banned
industrial Bitcoin mining. Individuals can still mine. “Despite the
government’s hardline approach, Ye is determined to carry on: “This
industry is extremely volatile. High emotions and stress are
involved, but that’s also its appeal. Companies are banned from
mining Bitcoin, but individuals aren’t,” Ye said, adding that he
plans to turn around his operation by purchasing old equipment and
downsizing.” The Chinese government was only worried about
industrial-sized private mining operations. The question is why.
What are they planning? The Chinese government seems to be
playing a similar game when it comes to Big Tech. Andy Tian, who
led Google China’s mobile strategy in the 2000s and is now CEO at
Beijing social media startup Asian Innovations Group, says it will
be “positive for innovation” and “competition in China will be
fiercer than in the U.S.,” because smaller companies will benefit
from policies that rein in the largest competitors. And they’re
using the country’s unique characteristics to do this fast and
mercilessly. Angela Zhang, director of Hong Kong University’s
Centre for Chinese Law and the author of Chinese Antitrust
Exceptionalism, says the intervention will reshape the tech
industry in China faster than it could happen elsewhere. “The case
against Alibaba took the Chinese antitrust authority only four
months to complete, whereas it will take years for U.S. and EU
regulators to go after tech firms such as Facebook, Google, and
Amazon, who are ready to fight tooth and nail,” she says. BTC price
chart for 08/10/2021 on Coinbase | Source: BTC/USD on
TradingView.com What Does The New China Model Want To Achieve? This
is where Bloomberg’s case falls flat. They have no idea what the
Chinese are thinking. If China is abandoning the Silicon Valley
model, what will it replace it with? Insiders suggest it will be
less founder-driven and more China-centric. Why is China dwarfing
its biggest industries and players? Is the “China Model” just
concerned with scale? Or is control their focus? Are they cracking
down on people and companies with too much power that work on a
global scale? We wouldn’t know. However, this paragraph’s facts and
assumptions could provide a clue. Xi has called the data its tech
industry collects “an essential and strategic resource” and has
been pushing to tap into it for years. Following a 2015 mandate,
cities from Guiyang to Shanghai have set up data exchanges that
facilitate the transfer of anonymized information between
corporations. This could lead to a nationalized data-sharing system
that serves as a kind of digital public infrastructure, putting a
massive trove of data into the central government’s hands. Is it
data they’re after? Does Bitcoin’s pseudo-anonymity scare them? Is
their crackdown on Big Tech even related to their crackdown on
Bitcoin mining? There’s only one thing we can know for sure:
China’s making big coordinated moves when it comes to tech. And
they seem to have a plan. A “China Model,” if you will. Featured
Image by Markus Winkler from Pixabay - Charts by TradingView
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