This weekly roundup of news from Mainland China, Taiwan, and Hong Kong aims to curate the industry’s most important news, such as influential projects, regulatory changes, and enterprise blockchain integrations.
In this week’s column, the Man in Shanghai is determined to condense all of the regulatory hullabaloo into a single section in order to save you time and prevent you from wasting your time. Let’s get this party started.
It wasn’t much, just a warning from the Hebei Provincial administration, which later announced that cryptocurrency mining would be prohibited in the region. The fact that it’s effectively just reiterating a national policy that went into force months ago makes this largely a non-story. Hebei has never been known as a mining powerhouse, so the announcement is more of a formality than anything else. Mining operations will continue to be relocated overseas while China makes its way through its concerted effort to become carbon-neutral in the coming years.
Consider that China has 23 provinces, and nearly half of them have already reaffirmed their support to the national policy by declaring that cryptocurrency mining will not be tolerated in their jurisdictions.
The Securities Times, a state-owned journal, published an article in which it warned the public about the bursting of the NFT bubble. This Shenzhen-based journal called into question the true economic value of nonferrous metals, a topic that many of us have all pondered at some point in our careers. Despite this, the tendency has spread into less mainstream art circles, where NFT and metaverse-related events are growing increasingly popular, despite the widespread mistrust.
Selling shovels in a gold rush
Even though mining in China is a challenging endeavor, the manufacturing of mining machines continues to be a lucrative endeavor. For the first time in the company’s history, Canaan, one of the world’s largest manufacturers of cryptocurrency mining hardware, reported its highest quarterly profits. According to the company’s second-quarter financials, the company generated around $167.5 million in total net revenue. Because of the large spike in prices this spring, mining companies have been expanding aggressively around the world, which is likely to have contributed to this trend. The next wave of quarterly financial results will reveal a more detailed story, as investors will learn just how badly strong Chinese rules have harmed the manufacturing industry. Canaan’s Chairman and Chief Executive Officer, Zhang Nangeng, made the following statement:
“We delivered a remarkable performance in the second quarter of 2021. Despite unexpected regulatory policy dynamics and Bitcoin price volatility, we achieved record-high topline results as we delivered a robust 5.9 million Thash/s of computing power to our clients.”
Rounding up the trading space
In the last 12 weeks, volume on exchanges such as Huobi and OKEx has been largely unchanged, as has been the case. The most recent significant increase occurred during the sell-off that began in early May, around the time that Chinese officials began their crackdown. It is possible that some Chinese users are connecting to exchanges that have not traditionally been a dominating participant in the Chinese trading arena, as seen by a significant spike in volume on FTX over this period.
FIL continues to be a popular cryptocurrency on Huobi, finishing in the top five of the 24-hour volume chart on Thursday. Despite the fact that it is almost 50 percent below its all-time high from earlier this year, this coin has maintained its attractiveness among traders in China. On the OKEx volume charts, assets such as ADA, SOL, and DOT appeared prominently, which corresponded to the global volume distributions. Speaking of Solana, Chinese users on the microblogging site Weibo were outraged when the network went down on Wednesday, with some decrying the network’s decentralization as the cause. The question of whether Ethereum’s early technical troubles were akin to this incident sparked a lively debate, demonstrating that Solana and the Ethereum maxis will differ in any culture, regardless of the language used to express themselves.
Unleashing the eCNY
eCNY (digital yuan), the central bank digital currency created by the Chinese federal bank, is now being promoted even further, with popular app Meituan paying around $1.50 in digital yuan to users who sign up for a ‘digital wallet’ and use the app’s services.
Meituan is well known for its bright yellow food delivery service as well as its shared bicycles, which can be seen on nearly every street in the city. Aiming to promote low-carbon living, the initiative is open to nine pilot cities, including Beijing, Shanghai, Shenzhen, and Chengdu, with the goal of reducing greenhouse gas emissions.
The electronic clearing house (eCNY), which was once positioned as a more institutional remittance facility for commercial banks, is currently being aggressively marketed towards retail consumers. eCNY payment signs are already being displayed at point-of-sale counters around the country by prominent franchises such as McDonald’s and Zara. Although WeChat Pay and Alipay currently dominate the digital payment field, those two companies would likely struggle to maintain control of the market if the central government is interested in driving eCNY into competing applications.
The irony is that Meituan plays a unique role in the development of Chinese cryptocurrency meme culture. Token holders frequently joke that if the market falls, they will be forced to work in food delivery, which resulted in the creation of the meme below.
Meituan revealed that it had approximately 570 million users at the end of March. Other financial apps, including banking apps, have already incorporated wallet services into their offerings.