Gluwa News Digest Vol. 8

How China's ban could prove a good thing for crypto, "Volcano" mining, and the latest bank to begin ETH trading...

Gluwa News Digest Vol. 8

07/06/2021 - 20/06/2021

China bans Crypto again - What's different this time?

What’s happening

China has had a difficult relationship with crypto for quite long time. As far back as September 2017, China shut down local cryptocurrency exchanges amidst concern over the growing-popularity of Bitcoin and ICOs.

Now, 4 years later, China is once again clamping down on the industry. On May 18th, China banned financial institutions and payment companies from providing cryptocurrency related services and warned investors against trading. And now crypto-influencers on Weibo are being suspended amidst a social media crackdown. In a joint statement, officials said that recent cryptocurrency volatility was “seriously infringing on the safety of people’s property and disrupting the normal economic and financial order”.

Simultaneously, mining operation suspensions which began in inner Mongolia have now spread to the rest of China, as investigations regarding energy usage continue, although no final decisions on a total ban have yet been made. China had previously accounted for almost 75% of the world’s mining. Now images of empty mining farms are being widely shared on social media.


Why is it happening?

Local governments have been under pressure from Beijing to reduce their energy intensity in-line with China’s long-term carbon dioxide emission targets. With the Chinese mining industry set to consume more energy than Italy by 2024, the energy-intensity of crypto mining has made it an easy target. Seemingly, miners are already taking their cue to leave the country.

Moreover, the decentralization of crypto presents challenges to China’s model of state-control. One likely component of this is that cryptocurrencies offer the means to avoid China’s strict capital-flight controls, which limit citizens purchasing of foreign currency to $50,000 a year. A measure designed to prevent wealth flowing out from the country.

According to Chainalysis, over $50 billion worth of cryptocurrency has been transferred from China-based addresses to oversea ones. Although not all these transfers will constitute cases of capital flight, China is unsurprisingly keen to clamp down on any potential escape valves.

Possible implications

Bitcoin’s hash-rate has dipped sharply, along with prices. However, the clampdown on Chinese crypto is not an entirely negative one for crypto.

Already, miners are in the process of relocating their operations to countries with more open societies, robust regulatory frameworks and cleaner energy, with one source claiming that close to 60-70% of miners are planning to move to the United States or Europe. In particular, Texas has been cited as one possible beneficiary, although there are concerns over the reliability of Texas’ power grid. By default, regulators act favorably to industries which benefit their local economies. In this vein, a more developed western mining industry might also accelerate institutional adoption, regulation and integration.

Certainly, if operations do move to developed countries with stronger environmental regulations, then renewably mined Bitcoin will become much more prevalent. Something which can only be regarded as a good thing for the planet and the industry.

Policy & Regulation

  • Nigeria’s central bank is set to begin launching CBDC pilot schemes before the end of the year, reported Cointelegraph. Local neighbour Ghana is also at the latter stages of its CBDC development process.
  • El Salvador’s president has instructed the state-owned electricity company to begin renewable Bitcoin mining sourced from geothermal energy sources (volcanoes), reported Decrypt. However, 25% of El Salvador’s energy is already imported, suggesting that any gains from renewably mined Bitcoin might be offset by higher non-renewable energy imports in other sectors of the economy.
  • The World Economic Forum has released its DeFi policy toolkit designed to provide guidance for regulators and government policymakers, reported Cointelegraph. Reportedly, the toolkit seeks address concerns over heavy-handed regulation which could “stifle innovation”.


  • Ethereum’s hotly anticipated ‘London’ hardfork, integrating EIP 1559, is set to go live on testnets starting on June 24th, Cointelegraph reported. The mainnet upgrade is expected to go live at some point in July.
  • IBM has contributed significant software updates to the Hyperledger enterprise blockchain network designed to improve the Fabric Operations Console, as well as increase exchange and inter-operability functions, reported Coindesk.


  • The G7 have formalized a commitment to fight the growing threat of ransomware attacks, with virtual currencies cited as a key enabler, reported Decrypt. According to Chainalysis, cryptocurrency usage in ransomware attacks grew by 311% last year.
  • Goldman Sachs is planning to launch Ether options trading in the very near future, reported Bloomberg. According to Mathew McDermott, head of digital assets at Goldman, the recent rout represented a good entry-point for ETH to join BTC on their trading desk.


  • Iron Finance’s DeFi protocol and underlying collateral token (TITAN) experienced a large-scale ‘bank run’ as a negative feedback loop of selling/redemptions undermined the stablecoins value, reported CoinDesk. The protocol dropped in value from nearly $2 billion to near zero last Wednesday, and has led to calls for stablecoin regulation from Mark Cuban, a major backer of the project.