Will the Chinese government’s initiative to press for the usage of domestically produced hardware and software affect the bitcoin industry like it may affect the banking and fintech sector?
China has been on its path to revamp its information technology infrastructure for some time now. The Chinese government and regulatory agencies have been pressing for the use of Chinese made products to meet the industry requirements instead of opting for products manufactured by foreign (especially Western) companies.
China has been in a constant state of paranoia, similar to the way the United States has been reacting to any move (political, military and technological) made by China. According to reports, the new regulations drafted by the China Insurance Regulatory Commission calls for insurance companies to prioritize homemade hardware and software over those manufactured by foreign companies. While this is still a draft regulation, the chances of such regulation being passed in the near future is high.
This is not the first time China has tried to clamp down on usage of foreign IT products. Earlier, the country’s banking regulatory authority- China Banking Regulatory Commission (CBRC) had issued a draft cyber banking regulation which required the companies supplying banking technology to submit their source code and encryption keys to the government authorities. This was later dropped after the international players opposed this move.
The Chinese bitcoin industry is vast and known for their mining prowess. Currently the Chinese bitcoin mining pools dominate the bitcoin network with their off the charts hashrates. These new regulations introduced by the government regarding the usage of domestically manufactured hardware and software may soon extend to other sectors as well. It is quite possible that in the near future the Chinese authorities may make it mandatory for individuals and businesses to use Chinese made hardware and software to be eligible for property and cyber insurance policies.
In the event of such regulation being passed, the Chinese bitcoin mining sector may emerge unscathed as most of the hardware currently being used by Chinese bitcoin mining farms are manufactured in China itself. While the Western governments and IT companies are lobbying against the Chinese draft regulations promoting the use of domestic products, the United States and other countries have already banned the usage of computers and networking products manufactured by Lenovo, Huawei and ZTE at military and intelligence installations.
There is a sense of paranoia gripping both the Oriental and Western powers alike and while they keep tiptoeing around each other, the bitcoin industry will chug along, thanks to the self-sustaining mining equipment industry. Like China, there are American and European companies who design and manufacture bitcoin mining ASICs and other hardware which are widely used around the world. Ban or no ban, hardware from one place or another will keep on churning out the required processing power to mine bitcoin.
Reference: Foreign business lobbies ask China to revise cyber insurance draft rules (Reuters) Video Credits: Motherboard (VICE)