China bans Bitcoin mining (again)

China banning bitcoin mining

The never-ending story that is going on in China is starting to gain momentum. The repeated bans that the government there has issued against cryptocurrency investors, this time are no longer a bad dream. Bitcoin mines are being closed down en-masse in the Middle Kingdom. What are the reasons for this and what consequences may it have for the cryptocurrency market? This is discussed in this article.

The big move

China’s stance towards Bitcoin has been quite negative for many years. However, this is the first time we have seen such significant actions. Sichuan Province, one of the largest Bitcoin mining centers in the world, is officially shutting down the operations of mines of the largest cryptocurrency. Inner Mongolia, Qinghai Xinjiang, and Yunnan are facing a similar situation. The alleged reason that forces this kind of action is the high energy consumption that accompanies Bitcoin mining. China is working hard to reduce its carbon footprint. Miners therefore become an obstacle. This seems to be a blow to the network, as the cheap electricity of this Asian country has resulted in about 65% of the global Hash Rate being located in China. However, is the long-term news that bad?

A step towards mining decentralization

Pictures of abandoned mines, packed miners, many pounds of equipment, and ongoing logistical ventures are circulating the internet. Several companies, including Canaan and BIT Mining have announced that they are relocating their equipment to Kazakhstan, with the intention of quickly connecting and restarting it before the end of July. Other targets for miners are areas of the United States. Among them is Texas, famous for its friendly approach to cryptocurrencies. Therefore, it can be deduced that the breakdown of such a large amount of Hash Rate accumulated in one country, to several other regions of the world, in the long term is beneficial for the BTC network. This process fosters the decentralization that has guided the essence of Bitcoin since its inception. 

Short-term implications

While in the long term, the current situation is very favorable for Bitcoin, in the short term its price is actually suffering. Attacks that regularly occur from the Chinese government are causing panic in the market, pushing many investors to sell at a loss. We provided more analysis on this topic in an article titled “Bitcoin has reached another low below $30,000”. If you haven’t read it yet, be sure to take a look!

So is there anything to fear?

Time is required for the situation to normalize. The holiday period provides quite a bit of it given that historically it has not particularly affected the volatility of the Bitcoin price. This gives miners the opportunity to relocate and start up mines in new, friendlier areas. Once this happens, we should see the Hash Rate return to its previous levels. It is worth noting that after the increases we witnessed from October 2020 to May 2021, the market also needs to catch its breath. This gives hope that the increases will continue in the near future.

Disclaimer: Blockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email
Edward Snowden calls CBDCs perversion of cryptocurrencies

Edward Snowden calls CBDCs perversion of cryptocurrencies

CBDC represents a very special segment of blockchain technology. At its inception, it attracted positive sentiment. However, this has changed significantly over time, to the point where central bank digital currencies have been called cryptocurrencies by Edward Snowden. An unforgiving opinion Edward Snowden

Read More »

How many people in the world own cryptocurrencies?

You’ve probably noticed that the adoption of cryptocurrencies is growing rapidly. But have you ever wondered how many people actually own this type of asset? In this article, we’ll take a look at the numbers. Cryptocurrencies globally Thanks to the data provided by

Read More »
How big is the NFT space

How big is the NFT space?

Non Fungible Tokens is one of the crypto spaces that has been gaining the most popularity recently. There is a lot of talk about it, however, a handful of facts are useful. So let’s present NFT in numbers. NFT invasion Let’s start with

Read More »

Top Stories