Court in Beijing China invalidated a bitcoin mining contract between two companies and denied the plaintiff $18 million in damages.
China has long outlawed all cryptocurrency transactions and banned bitcoin mining in its territory. Recently, a court ruling further reaffirmed the government's stance, and its attempt to stop any possible mining activity.
On December 15, Beijing's Chaoyang District Court heard a dispute over late payments from bitcoin mining and judged that the service contract between the two companies was "invalid".
The plaintiff (Zhongyan Zhichuang Company) went to court after the defendant (Fengfu Jiuxin Company) did not pay the first 278,1654976 Bitcoins, worth about $ 18 million, as owed under its contract.
The first company bought the bitcoins mining machines, set up the whole workshop and rented it to the second to manage it. It would be paid according to the agreement between them, a fact that did not happen and so it ended up in the courts.
This is the first time a Chinese court has declared invalid bitcoin mining contracts. Following the ruling, the court urged the authorities in Sichuan, where the extraction referred to in the case took place, to "clear up" any such remaining activity.
The ruling, while not surprising, could discourage overseas companies from doing business with Chinese encryption companies. Although China has outlawed all cryptocurrency transactions and investments, many cryptocurrencies still retain engineering and business forces in the country while advertising services to clients abroad.
China began discussing cryptocurrency mining bans in 2019 and in 2021 began enforcing its legislation.
Virtual coin mining is "energy intensive, produces high carbon emissions and contributes little to the economy and such activities" must be eliminated ", said in a statement of September National Development and Reform Commission (China's state planner).
The signed contract, according to the Beijing court, "Is invalid because it undermines social and public interests." Therefore, their related rights and interests "should not be protected by law" and the parties involved "should bear the consequences" of their actions.
