Dont the chinese state see any taxable benefits in the btc business?
China can pass any law without the chinese people approval. They cant ban bitcoin but they can bitcoin mining in China if they want and if they do that how secure will the btc network be with half of its hashrate wiped off overnight? Can the btc network auto adjust quickly to any quick change in mining circumstances before any attacks to it?
Whats bitcoin got to do with free internet? Bitcoin is a currency not a website where the chinese state can restrict access to sites like facebook, youtube etc.
Well, that would just end up being met with disapproval. The very notion of Bitcoin was a disconnection from the centralized government, so the very moment China tries to profit off of mining with that, well, people would just straight up leave. Plus, it isn't like the network can be controlled by the government, nor can the influx of mining machines, so they really have no solid way to trace anyone who is mining. It's close to impossible just like how the very notion of China controlling the entire network is impossible since the former requires that they actually do the latter.