In setting an important court precedent, a court in Beijing, China, voided bitcoin mining (BTC) contracts signed in 2019, resulting in the plaintiff losing $1.6 million.
Citing several state newspapers, including Xinhua News Agency and CCTV, the South China Morning Post reported that in May 2019, Beijing Phonf Marketing Technology entered into three agreements with Zyzc Blockchain Technology, paying ten million yuan (or US$1.6 million) for the implementation of mining machines in the southwestern province of Sichuan.
In the lawsuit, Phonf Marketing argued that Zyzc Blockchain failed to pay 278,1654976 BTC (or $13.6 million at current prices) in compensation, demanding the return of money initially invested in the bitcoin mining contracts.
According to the authors, they only earned 18.5 BTC for the investment.
In your decision, dated Dec. 15, the Beijing court dismissed the lawsuit, saying the contract between the two companies was “invalid in the first instance”.
The court also presented the decision to the Sichuan branch of the National Development and Reform Commission, recommending the suspension of any remaining mining farms involved in the case.
China’s Bitcoin crackdown
When the deal between Zyzc and Beijing Phonf was made, Sichuan and several other provinces offered incentives to companies to encourage bitcoin mining by attracting companies with access to excess hydropower.
That changed in May of this year, when China’s State Council launched a major crackdown on the crypto industry, banning trading in cryptocurrencies and forcing large bitcoin mining operators to relocate their activities to other countries.
Before banning bitcoin mining activities, China was responsible for almost 2/3 of the entire world mining industry, but today it has completely lost its dominance and the US is the current leader.
In November, a member of the Communist Party of China was expelled after turning a blind eye to cryptocurrency mining activities in Jiangxi Province.
Translated and edited by Daniela Pereira do Nascimento with authorization from Decrypt.co.