- Chinese official’s life sentence for Bitcoin mining and corruption.
- Covert operation consumed 10% of city’s power.
- China’s crypto crackdown vs. thriving mining industry.
A former Chinese government official, Xiao Yi, has been handed a life imprisonment verdict due to his involvement in a concealed, extensive Bitcoin mining operation within the country. The operation, which was carried out covertly in Fuzhou, had consumed a significant portion of the city’s power resources.
Xiao Yi confessed to the charges and the government has already confiscated all the illicit gains and bribes he amassed.
Unauthorized Support for Bitcoin Mining
Xiao Yi was officially convicted for his abuse of authority, which involved providing financial and electricity subsidies to Jiumu Group Genesis Technology, a company based in Fuzhou. This company managed a massive fleet of over 160,000 Bitcoin mining machines and contributed to 10% of the city’s electricity consumption between 2017 and 2020.
Prosecutors argued that Xiao Yi tried to cover up the unlawful mining operation by orchestrating the production of falsified statistical reports and manipulating data related to electricity usage.
To mitigate the charges, Xiao Yi acknowledged his guilt, expressed remorse, returned the embezzled funds, and witnessed the seizure of both the bribes and his profits, as stated by the presiding judge of the Hangzhou People’s Court.
Simultaneously, the additional corruption accusations spanned from 2008 to 2021, during which time the politician allegedly engaged in bribery activities. These activities corresponded to his various roles, including director of the Beijing Office of the Jiangxi Provincial People’s Government, secretary of the Fuzhou Municipal Party Committee of Jiangxi Province, and vice chairman of the Jiangxi Provincial Political Consultative Conference.
The politician was found to have “illegally received property equivalent to more than 125 million yuan ($17 million), of which more than 57.82 million yuan ($7.9 million) remains unaccounted for,” as reported in a translated local statement on the ruling. The severity of the circumstances and their substantial impact were highlighted.
China’s Stance on Cryptocurrency
China currently maintains a comprehensive ban on all activities related to cryptocurrencies beyond simple ownership. This encompasses crypto mining, exchange services, fiat-to-crypto transactions, and onboarding procedures.
Nonetheless, effectively enforcing these bans has proven to be a challenge. Data from the Cambridge Bitcoin Mining Map underscores that China still contributes to 21% of the global Bitcoin hash rate, solidifying its position as the second-largest mining country after the United States.
Despite this, China persists in asserting more control over the domain of digital assets. The state-owned telecommunications operator has recently put forth a proposal for a “Digital Identity System” aimed at monitoring all users within the local metaverse.