Bitcoin "mining", it's time to stop
A company was entrusted to "mining", but the expected bitcoin income was delayed. The entrusting party sued the court and requested the company to pay its "deserved" huge income.
On December 15, this service contract dispute case was brought down in the first instance of the People's Court of Chaoyang District, Beijing.
The court determined that the contract was invalid and ruled to reject the plaintiff's claims.
It is reported that this is the first case in which a Beijing court found a Bitcoin "mining" contract invalid.
After the verdict of the case was pronounced, the Chaoyang Court also sent judicial advice to relevant local authorities, giving feedback on the virtual currency "mining" activity clues involved in the case, and suggesting that the virtual currency "mining" project should be cleaned up and rectified.
Signed an agreement on behalf of "mining" the court found invalid
Virtual currency "mining" activities refer to the process of calculating and producing virtual currency through dedicated "mining machines" (professional computer servers).
In May 2019, Fengfu Jiuxin Company and Zhongyan Zhichuang Company signed an agreement, stipulating that Fengfu Jiuxin Company entrusted Zhongyan Zhichuang Company to purchase and manage "mining machines", provide bitcoin "mining" data value-added services and pay for value-added services income.
After the contract was signed, Fengfu Jiuxin Company paid 10 million yuan to Zhongyan Zhichuang Company. Zhongyan Zhichuang Company purchased the "mining machine" and signed a commission contract with a third-party company ("mine").
During the performance of the contract, Zhongyan Zhichuang Company paid 18.3463 bitcoins to Fengfu Jiuxin Company, and has not paid any further income since then.
Fengfu Jiuxin Co., Ltd. repeatedly urged to no avail and filed a lawsuit in the court, requesting Zhongyan Zhichuang Company to deliver 278.1654976 bitcoins, or to deliver 9.55 million US dollars at the price of bitcoins on January 25, 2021, and to compensate for the services after the expiration of the service. Related losses.
The Chaoyang Court held that the transaction involved in this case was actually a "mining" activity for the production of virtual currency through the calculation of a special "mining machine".
Such "mining" activities consume large amounts of energy and carbon emissions, which are not conducive to the optimization of my country's industrial structure, energy conservation and emission reduction, and it is not conducive to my country's achievement of the goal of carbon peaking and carbon neutrality, and the falsehood derived from the virtual currency production and trading links Multiple risks such as asset risks, business failure risks, and investment speculation risks are prominent, which are detrimental to the public interest of society.
According to the provisions of the Civil Code, contracts that harm the public interest of society are invalid.
The court held that, knowing that there are risks in “mining” and bitcoin transactions, and the relevant authorities clearly prohibit bitcoin-related transactions, Fengfu Jiuxin Company and Zhongyan Zhichuang Company still signed an agreement on behalf of “mining”. This agreement should If it is invalid, the related property rights and interests arising therefrom shall not be protected by law, and the consequences shall be borne by the parties themselves.
In the end, the court determined that the contract between the two parties was invalid and ruled to dismiss all claims of the plaintiff, Fengfu Jiuxin Company.
Full-chain governance of virtual currency "mining" activities
"Since the day when Bitcoin was created, two settings have been made." Chen Zihan, an associate professor at the Beijing Institute of Technology Law School, told reporters. Centralization, not subject to government or financial institution supervision, adopts a proof-of-work mechanism and rewards mining with bitcoins. The result is that since the first bitcoin is mined, the number of remaining bitcoins will become less and less."
For a period of time, as the overseas market of virtual currencies such as Bitcoin has become popular, a large number of underground "mining" activities have spawned.
Bitcoin "mining farms" tend to gather in areas with abundant hydropower resources and consume huge amounts of electricity.
In September 2021, the National Development and Reform Commission and other ten departments jointly issued the "Notice on Renovating Virtual Currency "Mining" Activities" (hereinafter referred to as the "Notice"), pointing out that virtual currency "mining" activities have a low contribution to the national economy and contribute to the industry. Development, scientific and technological progress, and other leading roles are limited, and the risks derived from virtual currency production and trading are becoming more prominent. Its blind and disorderly development has an adverse impact on promoting high-quality economic and social development and energy conservation and emission reduction. Effective measures are required to comprehensively rectify Virtual currency "mining" activities.
"Any production and business activities should be carried out within the scope permitted by relevant national laws and regulations and industrial policies." The trial judge Li Zenghui pointed out that Bitcoin does not have the same legal status as my country's legal tender, and virtual currency trading activities are not true. Value support, prices are extremely easy to be manipulated, and there are multiple risks such as false asset risks, business failure risks, and investment speculation risks in token issuance financing and transactions.
The relevant national administrative departments have also issued notices on many occasions to remind consumers that the consequences and losses caused by the investment and trading of virtual currencies shall be borne by the relevant parties themselves, and the public should consciously increase their awareness of risk prevention and beware of the risks of virtual currency transactions.
After the trial of this case, the Chaoyang Court sent judicial advice to relevant local authorities, suggesting to investigate the Bitcoin “mining” projects and “mining farms” involved in this case, and prohibit the companies involved in the case from continuing to engage in “mining” activities, and at the same time, it is rich in hydropower resources. Other virtual currency "mining" projects in the region will be cleaned up.
"The pursuit of virtual currency reflects the overnight wealth and speculative psychology of some people." Chen Zihan pointed out that virtual currency "mining" activities involve multiple functional departments, and all regions and relevant departments must strengthen work coordination and information Sharing, forming a synergy of governance across the entire chain to ensure that the governance work achieves practical results.
She also suggested to accelerate the digitalization of the monetary system and financial system, and use legal digital currency to support economic and social development.
(Our newspaper, Beijing, December 15th, by our reporter Jin Hao)