A large portion of the world’s bitcoins are mined in China, a country that has been much tougher in recent months than ever before, with many bans on miners. Although you might think that this would be to the detriment of the bitcoin market, it could actually have a positive effect on the market.
China has been battling cryptocurrencies for years. In 2017, for example, the country’s central bank outlawed the initial public offering of coins, or ICOs, which resulted in nothing but lower bitcoin prices. Although China has since restricted cryptocurrency transactions over time, what has been a major concern recently is the ban on mining in several provinces.
Bitcoin mining was banned in Sichuan Province several days ago. The ban is said to shut down 90 percent of China’s mining capacity. In addition, the price of bitcoin dropped dramatically at the time, to less than $ 30,000, although the market is now slightly better.
Although such bans have raised fears, uncertainty and doubts about the future of the cryptocurrency market, many experts see such a move in the long-term benefit of Bitcoin. Here are three reasons why China’s austerity measures and minority migration are in the market’s favor.
1. Improve bitcoin mining decentralization
Although the departure of miners from China can be detrimental to the market in the short term, in the long run it can improve the market situation by decentralizing bitcoin mining in one country. If miners operate in different countries and geographies, they will be less vulnerable to future laws and restrictions.
It is estimated that 65% of bitcoin mining takes place in China, and now miners are moving to other countries to worry less about the rules. Apparently, China has been seeking a ban on the extraction of cryptocurrencies in the country since 2018, and now such an issue is being seriously pursued. In other countries, miners have sometimes encountered the same issue, but to a lesser extent.
Although other countries may ban bitcoin mining, none of them are as important as China because of its high market share. Now, with the departure of miners from China, the status of bitcoin mining will not change drastically with the enactment of a law, and in the long run the market will experience a better situation.
۲. Greener industry
One of the reasons for opposing bitcoin is the use of fossil fuels for mining, and China is less strict than the West. Now, with miners leaving China and migrating to other countries like the United States, the industry is expected to reduce carbon emissions.
One area that miners can migrate to is Texas, USA, which has low electricity costs and a growing share of renewable energy. In addition, Texas has a good relationship with the Ramzars to this day and therefore can be a good destination for miners in every way.
In general, the migration of miners to North America due to access to more diverse renewable energy sources can reduce the consumption of fossil fuels. Miner coal consumption is projected at 28 percent in North America, up from 65 percent in Asia.
In addition to greater access to renewable energy sources, Western governments can provide financial incentives to miners to encourage them to use such energy. Therefore, it is expected that with the migration of miners to these countries, the cryptocurrency mining industry, especially bitcoin, will become greener and fewer people will be able to object to it.
Ilan Musk, a fan of the cryptocurrency market, had previously announced Tesla’s acceptance of bitcoin, but later announced that his company would not use 50% of the clean energy to extract the cryptocurrencies. Will not accept it. Therefore, the greening of the bitcoin mining industry can be a very positive step in the long run and also reduce market fluctuations.
3. No ban on holding bitcoins in China
While China has increased restrictions on transactions and the extraction of cryptocurrencies, it is not forcing people to give up their assets. So people in this country can still hold bitcoins or other cryptocurrencies. So long-term holders will continue to exist in China, which will benefit the market.
Cryptocurrencies directly affect China’s economy and financial stability, and China wants to keep its economy away from cryptocurrency market fluctuations with restrictions. However, people can still have passwords and there is no ban on this.
The departure of miners from China could have market benefits and diminish the voice of critics. The main criticism of the cryptocurrency market is how it is extracted. It is important not to use fossil fuels in a time of global warming and climate change, so moving to renewable energy in the long run will benefit both the earth and the cryptocurrency industry.
With decentralization from one country, miners have access to a variety of resources in different countries, and of course, by changing a law in one country, the market does not fluctuate sharply. Therefore, leaving this China is a positive approach from such a perspective.
One of the possible reasons for China’s new austerity measures is its heavy investment in digital yuan, as well as its efforts to reduce its role in carbon production.
We’ll have to wait and see what the future holds for the market and whether Bitcoin can one day rise above $ 60,000, although some experts even point to the cryptocurrency’s $ 100,000 price tag.