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Beijing's first bitcoin "mining" contract case was upheld in the second instance

Time : 05/11/2021 Author : gi8qkb Click : + -
        In May 2019, a technology company signed a computer equipment procurement contract, a service contract, and a cloud data server hosting and data value-added service agreement with a blockchain company. The former entrusted the latter to purchase and manage "mining machines", provide data value-added services of bitcoin "mining" and pay the revenue of value-added services, while the former paid management fees to the latter. So after the contract was signed, a technology company paid 10million yuan to a blockchain company. A blockchain company purchased the "mining machine" and signed an entrustment contract with a third party company to put the "mining machine" into operation in the "mines" in Shuiluo Township and Shawan Township, Muli County, Liangshan Prefecture, Sichuan Province.
        However, during the whole contract performance period, a blockchain company paid a total of 18.3463 bitcoins to a technology company as data value-added income, and no income has been paid since then. A technology company repeatedly urged fruitless, and appealed to the court, requesting the court to order a blockchain company to deliver 278.1654976 bitcoins, and compensate for the loss of servers occupying micro storage space after the service expires. After hearing, the Chaoyang Court held that the "mining" activities involved in the case have large energy consumption and carbon emissions, which are not conducive to the optimization of China's industrial structure, energy conservation and emission reduction, and the realization of China's goals of carbon peak and carbon neutralization. In addition, the risks of false assets, business failure and investment speculation derived from the production and trading of virtual currency are prominent, which is detrimental to the social and public interests.
        A technology company and a blockchain company, knowing the risks of "mining" and bitcoin transactions, and the relevant departments clearly prohibit bitcoin related transactions, still signed an agreement on behalf of "mining". This agreement should be invalid, and the relevant property rights and interests arising therefrom should not be protected by law. The consequences of the above-mentioned acts should be borne by the parties themselves. After the sentencing, the Chaoyang Court sent a judicial proposal to the Sichuan development and Reform Commission, suggesting that the bitcoin "mining" project involved in the case be investigated, that the company involved be prohibited from continuing to engage in "mining" activities, and that the "mining" project involved in the case and other local virtual currency "mining" projects be investigated and cleaned up.
        In February this year, the people's Court of Chaoyang District issued a notice on the progress of the official account. After receiving the judicial advice of Chaoyang Court, Sichuan Provincial Development and Reform Commission attached great importance to the investigation and monitoring of the main company of the "mine" involved. It is reported that the company is entrusting a third party to cancel the enterprise and deal with the closing work of the early "mining" activities. It is expected to complete the cancellation in May 2022. In addition, the Sichuan Provincial Development and Reform Commission immediately sent a letter to the Liangshan Prefecture development and Reform Commission, requesting to clean up and investigate the "mining" activities of virtual currencies in relevant regions and enterprises. As of January 6, 2022, the centralized virtual currency "mining" sites in the Shuiluo River and Muli river basins of Liangshan Prefecture, Sichuan Province, where the virtual currency "mining" project is located, have completely stopped "mining" activities, the equipment has been cleaned up, and the plant is also being demolished.
        The speculation of virtual currency trading disturbs the economic and financial order, breeds illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, money laundering, and seriously endangers the property safety of the people and the national financial security. "Mining" at the cost of power resources and carbon emissions is contrary to high-quality economic and social development and the goals of carbon peaking and carbon neutralization, as well as public interests. Relevant departments rectify the "mining" activities of virtual currency and identify the business activities related to virtual currency as illegal financial activities, which is conducive to ensuring China's development interests and financial security. Judging from the high energy consumption of "mining" and the impact of bitcoin trading activities on the national financial order and social order, the contract involved should be invalid.
        As the main body of the socialist market economy, both sides should abide by the rules of the market economy and bear the corresponding social responsibilities to promote the high-quality and sustainable development of the economy and society. The "mining" activity of virtual currency refers to the process of calculating and producing virtual currency through a special "mining machine". "Mining" requires the use of a large number of special computers with supercomputing capacity as "mining machines" to execute specific algorithms and calculate, so mining machines need to constantly improve their computing power, which not only bears the cost of mining machines, but also a lot of power costs for mines. Since 2013, relevant departments in China have issued policy documents for many times, such as bitcoin and other virtual currencies and "mining" activities to remind of risks.
        Since May this year, the central and local governments have implemented comprehensive and strict control over bitcoin mining since 2021, and the domestic bitcoin industry has entered a cold winter of "clean-up and shutdown". The financial stability and Development Commission of the State Council held its 51st meeting. When studying and deploying the key work in the financial field in the next stage, it mentioned that we should resolutely crack down on bitcoin mining and trading. The Inner Mongolia development and Reform Commission released the eight measures on resolutely cracking down on and punishing virtual currency "mining" (Exposure Draft), which will reduce energy consumption budget indicators for industrial parks, data centers, self owned power plants and other entities that provide site and power support for virtual currency "mining" enterprises; For those who deliberately hide, fail to report, fail to clear up and close down in time, and fail to carry out examination, approval and supervision, they shall be seriously held accountable in accordance with relevant laws and regulations and Party regulations.
        The development and Reform Commission of Xinjiang Changji Hui Autonomous Prefecture issued the "notice on immediate suspension and rectification of virtual currency" mining "enterprises", requiring the administrative committee of Xinjiang Zhundong national economic and Technological Development Zone to immediately order all virtual currency "mining" enterprises to suspend production and rectify before 14 o'clock on that day. The Qinghai Provincial Department of industry and information technology issued the notice on comprehensively shutting down virtual currency "mining" projects, strictly prohibiting all regions from establishing and approving all kinds of virtual currency "mining" projects, and comprehensively shutting down all kinds of existing virtual currency "mining" projects. It also requires resolutely investigating and correcting project subjects who have established projects in the name of big data and Supercomputing Center but are engaged in virtual currency "mining", and stopping providing sites for virtual currency "mining" Power support.
        According to the document of the notice of Sichuan development and Reform Commission and Sichuan Energy Bureau on clearing and shutting down the virtual currency "mining" project, for the virtual currency "mining", the relevant power enterprises in Sichuan need to complete the screening, clearing and shutting down work before June 20. While the case was in progress, the national development and Reform Commission and other ten ministries and commissions jointly issued the notice on regulating the "mining" activities of virtual currency, which directly pointed out the harm of the "mining" activities of virtual currency and required that effective measures be taken to comprehensively rectify the "mining" activities of virtual currency. It needs to be recognized that at present, there is no legal norm that directly determines that "mining" behavior is suspected of a crime, and so is "virtual currency".
        The two sides of this sentence are that although the "mining" behavior is not directly recognized as illegal, the "mining" behavior actually damages the public interest, so the contract behavior carried out by it is not protected by law; At the same time, there is still the possibility of illegal activities in the process of "mining". For example (2021) Yu 01 Xing Zhong No. 315 criminal ruling, the reason why the "mining" behavior involves criminal crimes lies in the unauthorized installation of equipment and theft of electricity; (2021) the criminal ruling Chuan 07 Xing Zhong No. 85 shows that some illegal organizations use professional terms such as virtual currency, blockchain and mining to publicize and develop offline to ordinary people, and the factual behavior belongs to illegal pyramid selling.
        There are also the most common crimes of illegally absorbing public deposits and fund-raising fraud. The "mining" platform in a large number of cases has been reduced to a "tool" for the actual controller to defraud. For the purpose of illegal profit, it publicizes among the public that it will eventually absorb public deposits or raise funds in disguise, such as (2020) Shan 06 criminal ruling No. 144, (2019) min 01 criminal ruling No. 1300. In addition, it may also involve relevant computer crimes, such as the crime of illegally controlling computer information system, the crime of illegally obtaining computer information system data, and so on. "Mining" behavior still has strong complexity, and China's supervision is gradually improving the awareness of such behavior, but up to now, it is neither a legal behavior protected by law, nor a natural illegal behavior, but it is very easy to become the "appearance" or "criminal content" of illegal behavior, so it needs to choose a more rigorous treatment method when resorting to justice to seek protection.
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