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China begins next phase of CBDC testing with e-CNY payment for public transport

China begins next phase of CBDC testing with e-CNY payment for public transport

Scan and pay with e-CNY is now available in multiple Chinese cities for citizens looking to ride their local buses and subways.

According to multiple sources, on Tuesday, China officially began rolling out the next round of its central bank digital currency (CBDC) pilot test program. In the city of Guanzhou, it is now possible to pay for public bus rides with the digital yuan (e-CNY) CBDC on 10 transit routes, the first ever in the country. To do so, passengers simply need to download the e-CNY app, deposit funds, and scan the QR code located in the bus payment section to pay for their ride. 

Similarly, the day before, the city of Ningbo said that passengers could now pay for subway rides at 125 stations with e-CNY. Ningbo is the ninth city in China that has rolled out the e-CNY pilot test in its subway lines, where passengers can simply scan and pay for the the journey. 

The Chinese government has rapidly expanded the utility of the e-CNY this year. Just last week, it became possible to pay for employment housing fund contributions in the city of Guangzhou with the CBDC. To revitalize consumer spending in the face of strict coronavirus lockdowns, the government partnered with food-delivery giant Meituan and e-commerce platform JD.com to create e-CNY air-drops that can be spent at listed venues.

In its last data update dated June 20, over 6 million unique users have ordered services with e-CNY funds on Meituan. Meanwhile, as of July, JD.com says that it has processed more than 4 million e-commerce transactions worth an estimated 900 million CNY ($131.6 million) since it began accepting the e-CNY as tender. Approximately 830 billion ($121.4 billion) worth of e-CNY transactions was recorded in the first five months of 2022. 

Chinese mining giant Canaan doubles profits despite the blanket crypto ban

Chinese mining giant Canaan doubles profits despite the blanket crypto ban

The Chinese crypto miner maker Canaan has been expanding its mining business, accumulating a total of 346.84 BTC by the end of June.

Major Chinese cryptocurrency miner manufacturer Canaan appears to have no issues with the local ban on crypto, as the company’s overall performance has continued to grow in 2022.

Canaan officially announced financial results for the second quarter of 2022 on Thursday, reporting a 117% increase in gross profit from the same period of 2021. According to the firm, the Q2 profits amounted to 930 million renminbi (RMB), or nearly $139 million.

The company’s Q2 net income was 608 million RMB, or $91 million, or a 149% increase from 425 million RMB in the same period last year. Canaan noted that foreign currency translation adjustment in Q2 was an income compared to previous losses due to the U.S. dollar appreciation against RMB during Q2.

Despite posting significant profits, Canaan has found the second quarter a challenging period due to Bitcoin (BTC) plummeting below $20,000 in June, the company’s CEO Nangeng Zhang said.

“The COVID-19 containment lockdown in key cities in China also brought severe disruptions to our daily operations and demand for our AI chips,” he noted.

Zhang mentioned that Canaan has been expanding its global presence, particularly establishing international headquarters in Singapore. The firm has also been working to scale its mining business, generating more BTC with an improved power supply. As of late June, Canaan held a total of 346.84 BTC, or $8.1 million, the CEO said, adding:

“We are fully aware of the downward pressure from the Bitcoin price since the last fourth quarter and expect it to bring prolonged headwinds to our performance in the coming quarters. Nevertheless, we believe in the unique value of Bitcoin and its long-term prospects.”

Canaan’s chief financial officer James Jin Cheng echoed the CEO’s remarks, stating that the company expects a tougher market environment from the lower Bitcoin price level as well as increased energy price and various pandemic and geopolitical uncertainties. He stated:

“As the Bitcoin price further decreased in the second quarter, we responsively lowered our product price for spot sales to shoulder the pressure with our clients. […] We expect the gross margin to decrease dramatically in the second half of this year.”

The ongoing cryptocurrency winter is not the only concern of crypto mining companies in China though. As previously reported, China announced a blanket ban on all crypto operations — including mining and trading — in September 2021, pushing many firms to force global expansion and escape to other countries. Prior to the ban, China was taking down multiple crypto mining farms in a move to save energy and curb crypto operations in the country.

Related: Bitcoin mining revenue jumps 68.6% from the lowest-earning day of 2022

Apparently, the “great Chinese crypto ban” has not affected local crypto enthusiasts and firms too much so far as China reemerged as the second-largest Bitcoin mining country by January 2022. According to data from the Cambridge Bitcoin Electricity Consumption Index, China still hosts 21% of the total global Bitcoin hash rate, following only the United States, which produces 38%.

Bank of China unveils new e-CNY smart contract test program for school education

Bank of China unveils new e-CNY smart contract test program for school education

Under the pilot test, parents could enroll their children in after-school vocation programs via smart contracts.

According to local news outlet Sohu.com, on Tuesday, the state-owned Bank of China announced a new program to bridge primary school education with smart contracts. In a combined partnership with local education and financial authorities, parents residing in the city of Chengdu, located in China’s Sichuan province, will be able to enroll their children in after-school or extracurricular lessons using the digital yuan central bank digital currency, or e-CNY.

Under the pilot test, parents start by paying a deposit to a private educational entity for a series of lessons. Afterward, a smart contract binds each lesson on a pro-rata basis to the deposit. This way, should their children miss a lesson, the e-CNY payment is automatically credited back to their account via smart contract. The Bank of China stated:

“The program seeks to explore the benefits brought forth by e-CNY smart contracts. One potential use case is replacing the role of regulatory authorities to monitor payment transactions between parents and private education entities. Another is improving transactions’ liquidity via zero transaction fees embedded in the e-CNY design.”

Previously, the Bank of China rolled out an e-CNY airdrop program for the residents of the city of Chongqing as part of a local incentive to lower carbon emissions. Users receiving the airdrop can dispense their funds for scooter rides, food deliveries without packaged utensils, recyclable shopping bags and tickets to public transport. Over 4,567,000 merchants across China now accept e-CNY as payment in alignment with the country’s strategy to stimulate and digitize the economy with the aid of emerging technologies such as blockchain.

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