Why China is cracking down on Bitcoin

China and Bitcoin have had a strained relationship for years.

In 2013, China prohibited financial firms from handling Bitcoin transactions. Four years later, during a boom in “initial coin offerings,” or ICOs, a cryptocurrency cash-grabbing mania, China made such sales illegal, and it banned domestic cryptocurrency exchanges from trading fiat currency for crypto. (Over-the-counter trading desks were able to keep operating.)

China has lately been tightening its grip. Last month three regulatory entities reiterated the government’s long-standing position: Financial firms and crypto cannot mix. Chinese law enforcers have allegedly rounded up thousands of crypto money launderers in recent months. One by one, Chinese provinces have recently turned hostile to the industry. Coal-friendly Xinjiang and Inner Mongolia kicked off a crackdown on so-called Bitcoin miners; on Friday hydro-hub Sichuan joined the purge.

Videos of people packing up their crypto-farming data centers are circulating on Bytedance’s Douyin, China’s TikTok. You can see Bitcoin “miners”—the folks who set power-hungry computers up to the task of harvesting the cryptocurrency—powering down their machines, boxing them up, and shipping them off. Market watchers suspect that miners and other crypto-affiliated operations—fearful of running afoul of the government and facing penalties—are dumping coins, adding to a market-wide selloff. Bitcoin dropped as much as 7% to $32,600, and Ether, the second-highest valued cryptocurrency, fell 11% to below $2,000 on Monday. (The Fed’s recently hawkish comments didn’t help either.)

Investors rattled by these developments ought to keep something in mind: China was never going to let Bitcoin alone. The cryptocurrency posed a threat to the country’s strict capital controls, protective measures designed to prevent an outflow of wealth abroad. Bitcoin’s anti-censorship stance ran directly counter to the Communist Party’s media-scrubbing ethos. The most that can be said is China tolerated Bitcoin for a while—especially as it furthered the country’s aim to knock the U.S. dollar off its hegemonic global reserve currency pedestal.

Peter Thiel, the PayPal cofounder and contrarian investor, caused a stir when he pointed this out while speaking at a recent event. “Even though I’m a pro-crypto, pro-Bitcoin maximalist person, I do wonder whether if at this point Bitcoin should also be thought of in part as a Chinese financial weapon against the U.S.,” he said.

Thiel’s suspicions were right. But now that China has its own digital currency—the e-yuan, a tender that Thiel called a “totalitarian measuring device”—it is beginning to view Bitcoin as more harm than help. Let countries, like El Salvador, take over; China is concerned with the success of its own nationalistic project. Besides, for all Bitcoin’s potential as a thorn in the side of the western world, it has been worsening computer chip shortages, flouting environmental goals, and bequeathing riches on impetuous libertarian-minded folks and stability-upending fintech giants.

China has tallied up the pros and cons of cryptocurrency on its own private ledger. The government realizes, correctly, that it has more to lose—authority, control, power—by letting Bitcoin flourish at home than it has to gain. Don’t expect it to change its mind anytime soon.

Ironically, China may have harbored a boomerang that will come back for a thwack. As Fred Ehrsam, the Coinbase cofounder who left in 2017 to start Paradigm, a crypto investment firm, put it in a recent interview with Bloomberg, “I think crypto is the next internet-sized opportunity for the United States.”

Robert Hackett




Cut down in one's Prime. Happy Prime Day, Data Sheeters. Fortune has a deal-tracking and buying guide to help you navigate the e-tailer's invented holiday, which lasts through tomorrow. Lots of other sites have good guides, too—including The Verge, Wired, and Ars Technica. Shop away.

Composite number day? Not an Amazon fan? Other big retailers, like Walmart and Target, are holding rival sales. If you're not a fan of them either, you might want to keep an eye on Shopify, which just inked an affiliate marketing deal with some major publishers. Or you could keep some of these smaller e-commerce startups on your radar

Sprechen sie antitrust? German regulators opened an antitrust probe into Apple today. "A main focus of the investigations will be on the operation of the ‌App Store‌ as it enables Apple in many ways to influence the business activities of third parties," Andreas Mundt, president of Bundeskartellamt, the federal cartel office, said in a statement. The investigation adds to Apple's list of antitrust proceedings taking place in the U.S. and abroad, in places like Russia. 

Listen up. Facebook's Clubhouse competitor, Live Audio Rooms, is rolling out in the U.S. today—and unlike Clubhouse, there's no limit on the number of listeners who can tune in. Meanwhile, Morgan Stanley analysts say Facebook remains the top pick among large-cap social media stocks even as the pandemic engagement bump wears off.

"The sky above the port was the color of television tuned to a dead channel..." Remember the catastrophically buggy launch of Cyberpunk 2077 in Dec. 2020? Well, the video game is back in action. You can now download the game for PS4, but an updated PS5 version is not expected until the second half of this year. Despite the new launch, the Playstation Store still warns people, "Purchase for use on PS4 systems is not recommended." 


E3 has long been the centerpiece of the gaming industry, its most vital event. But Sony dropped out in 2019, a major blow. Then the show went virtual, due to the pandemic, and now it is competing with rival events, like Summer Game Fest, an expo created by Geoff Keighley, a former E3 partner and live presenter. The Washington Post examines how E3 must re-find its footing after being set back on its heels in recent years.

For the video game industry, summer was once a season dominated by a monolithic convention in Los Angeles, an annual attraction filled with wall-to-wall announcements from the biggest companies in gaming. E3, or the Electronic Entertainment Expo, welcomed game publishers, developers, media and fans onto the packed floors of L.A.'s convention center and reveled in the spectacle of the gaming world come together.

Over the past few years however, a series of unrelated events has eroded that monolith. The landscape, once uniform, has fractured, producing a sprawling delta of livestreams and competing events that have divided gamers’ attention and lessened E3′s usual impact.


Richard Branson wants the infrastructure bill to incentivize hyperloops by Nicole Goodkind

Europe’s privacy regulators call for a ban on facial recognition in publicly accessible spaces by David Meyer

The bizarre story of Lordstown Motors by Lucinda Shen

After COVID, will the U.S. and Europe enjoy a ‘Roaring ‘20s’? Not so fast by Sven Smit and Jan Mischke

Asia has the world’s most advanced digital currencies. Here’s where each one stands by Yvonne Lau

Some of these stories require a subscription to access. Thank you for supporting our journalism.


Electric cars are having a moment, sure. But how about volcano-powered cars? Christian von Koenigsegg, CEO of the eponymous Swedish boutique sportscar-maker Koenigsegg, proposes using methanol derived from capped volcanoes to power vehicles. Guess volcanoes aren't just for Bitcoin anymore.

Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet