Chinese Communist Party Officials Face Punishment for Corruption Helping Bitcoin Miners

JAKARTA - According to a report published by the Chinese state-owned daily news program, Xinwen Lianbo, on December 29, Xiao Yi, former secretary of the Communist Party of Fuzhou City, pleaded guilty to corruption charges at the Hangzhou Zhejiang Intermediate People's Court.

During his tenure as director from 2008 to 2021, Yi was accused of accepting bribes of more than 125 million Chinese yuan (IDR 279.6 billion) related to illicit construction and promotion programs.

In addition to the charges mentioned above, Yi also pleaded guilty to charges related to business transactions between himself and Bitcoin miners from 2017 to 2021. It is unclear whether the series of charges are related.

“During his 2017 to 2021 tenure as Secretary of the Communist Party of Fuzhou City, Xiao Yi provided support to cryptocurrency mining companies in the form of subsidies, capital assistance, and electricity guarantees. This action is against national regulations, New Development theory, and caused great harm to public property, leading to disastrous consequences," the official said as reported by Xinwen Lianbo.

The court has adjourned and will sentence Yi at a future session.

Citing the need to achieve “carbon neutrality” and “high energy costs” targets, the Chinese government has banned all cryptocurrency mining activities as of September 24, 2021. The law blocks cryptocurrency miners' access to electricity and capital markets and includes investment bans overall.

However, it appears that the ban is difficult to enforce, partly due to the decentralized and peer-to-peer nature of crypto mining. In May 2022, Cointelegraph reported that China had returned as the world's second-largest Bitcoin mining center despite the ban. The law itself also allows local authorities to charge cryptocurrency mining rates of 0.30 yuan per kilowatt-hour of electricity use as an alternative to cutting energy if found.