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China Regulates Virtual Currency "Mining" Activities

Mon, 25 Oct 2021
Categories: China Legal Trends

The National Development and Reform Commission, the People's Bank of China, and other nine authorities jointly issued the “Notice on Regulating the Virtual Currency ‘Mining’ Activities” (hereinafter “the Notice”, 关于整治虚拟货币 “挖矿”活动的通知).

According to the Notice, virtual currency mining activities refer to the process of using special mining machines to calculate and produce virtual currencies, which is of high energy consumption and carbon emission, while with a low contribution to the national economy, and plays a limited role in industrial development and scientific and technological progress. The Notice aims to regulate the virtual currency "mining" activities, optimize China's industrial structure and promote energy conservation and emission reduction.

The Notice specifies the rectification measures for the classification of investment projects with "mining" activities. The Notice forbids investment in the construction of new projects and calls for accelerating the exit of existing projects. For new projects, the Notice requires that the virtual currency mining activities shall be categorized as the eliminated industry, and strictly prohibits all such activities from being carried out under the name of data centers in disguised form. For existing projects, the Notice prescribes that power supply acts in violation of laws and regulations shall be investigated and dealt with in accordance with law, and power generation enterprises, especially small hydropower enterprises, cannot supply power to any virtual currency mining project from the power grid or through special lines. Moreover, the Notice plans to implement differential electricity prices and the special electricity prices for enterprises subject to elimination. Besides, the Notice doesn’t allow virtual currency mining projects to participate in the power market, stops all financial and tax support to virtual currency mining projects, ceases the provision of financial services to virtual currency mining projects, and eliminates such projects within a time limit in accordance with provisions of the “Guiding Catalogue for Industrial Restructuring” (产业结构调整指导目录).   

 

 

Cover Photo by vigor poodo (https://unsplash.com/@vigorpoodo) on Unsplash

Contributors: CJO Staff Contributors Team

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