China Just Made Crypto Transactions Fully Illegal

China Just Made Crypto Transactions Fully Illegal
Photo: Dan Kitwood, Getty Images

After spending the past few months rounding up an untold number of crypto criminals across China, it looks like local authorities have finally had enough. The People’s Bank of China posted a terse notice on its blog on Friday morning where the financial regulator made its stance pretty clear: Any crypto-related transactions are considered “illicit financial activity,” and are 100% illegal. Yes, even if you’re working with offshore exchanges. Yes, even dogecoin. (Sorry, Elon.)

The notice highlights cryptocurrency mainstays bitcoin and ethereum as examples of what the country’s trying to stamp out. Roughly translated, the Bank defines both of these as virtual currencies that are issued by non-monetary authorities, use encryption technology, distributed accounts or similar technologies, and exist in digital form.” These currencies, it goes on, don’t have the same status as legal tender and “cannot be circulated in the market” as, well, actual currency.

Chinese authorities have become increasingly hawkish on crypto since 2017, when the country first banned initial coin offerings. The People’s Bank of China subsequently banned any websites and exchanges dedicated to hosting these offerings. Then it banned the country’s financial institutions from dabbling in crypto. Naturally, none of this stopped crypto enthusiasts from getting their hands on their sweet, sweet tokens nor did it stave off a huge mining boom.

Estimates show that up to 75% of the world’s bitcoin mining happened in China before a major crackdown this year. The country’s cheap electricity in hydropower hubs like Sichuan and coal-powered provinces like Inner Mongolia led to massive mining warehouses becoming an increasingly common sight. This past summer, 26 Sichuan mining farms got their hydroelectricity access cut off as part of the ongoing crypto crackdown while Inner Mongolia banned mining outright.

Bitcoin mining is a resource-intensive enterprise that guzzles more electricity than some small countries; its carbon footprint is huge, as is its pollution problem — and at least one study has shown real human health risks associated with proximity to these warehouses mining digital dollars. In part, these environmental concerns are what drove Chinese authorities to start their years-long crusade in the first place (the other part was crypto’s prevalence in money-laundering schemes).

Texas power companies have already been pushed to their breaking point this year, and some have already started buckling under the new surge of mining operations. How the new ban in China impacts mining operations and emissions tied to bitcoin and other cryptocurrencies remains to be seen. But in the U.S., at least, bitcoiners have found a warm welcome in some places.

A number of China’s bitcoin miners have come to the U.S., adding to a growing mine industry from Texas to upstate New York. Sen. Ted Cruz has been vocal about deregulating cryptocurrencies, and Miami’s mayor has also said he would be happy to have miners and crypto enthusiasts call the city sinking into the sea home.