Over the past couple months, Bitcoin has faced a large amount of negative news. Most of it being exaggerated FUD. However, the news coming out of China is real, very real.
Yes, China has “banned” Bitcoin and cryptocurrency many times previously but this time seems to be serious. This is especially frustrating for miners in China because in 2020 new regulation was introduced that allowed mining operations to register their names and operate in government sanctioned hydro consumption areas. Now, with little notice Bitcoin mining has been banned forcing miners to remove all infrastructure, machines, shelving, containers, etc within 1-2 weeks.
According to Kevin Zhang of Foundry, roughly 70% of the Bitcoin mining capacity in China has gone offline and will likely increase to 90% by the end of the month. Since China is one of the leaders when it comes to Bitcoin mining, the hash rate has experienced a severe decline as these miners shut off their machines.
This is a major shift in the Bitcoin network. China controlled more than half of the mining capacity before this change, which will likely crash to single digits with only small scale miners left that can remain undetected.
What has been most interesting is seeing miners pack up and move their operations quickly. Some of the most popular destinations include Kazakhstan, Texas, Miami, Maryland, and possibly parts of South America as countries begin to become pro Bitcoin.
Check out this video of real-time mobilization…
This will likely take a couple months before the infrastructure is fully back online in new jurisdictions. As of now it appears the actual selling of mining machines is still in tact in China as Bitmain continues to release new updated machines.
Some other notable outcomes from China’s new stance on cryptocurrency includes:
Decrease in leverage trading as Huobi changes their max leverage to 5x from 125x for derivatives
Alibaba Cloud may cancel domain names and servers for cryptocurrency companies
Software no longer providing Bitcoin market data
Banking on and off ramps to crypto will be cut off
All of this has brought on massive sell pressure as miners liquidate their holdings, institutions in China sell to avoid any negative regulations, and retail investors sells to get out of their positions and avoid any government intervention. China has been one of the biggest markets when it comes to crypto so this will likely have lasting effects on prices.
However, what doesn’t kill Bitcoin makes it stronger. Mining dominance moving away from a centrally controlled communist regime is a long-term positive sign for a decentralized network.
Much respect to all the miners in China who have served the network for a decade and have acted fast to mobilize and find new countries to operate in. We will be watching hash rate and anticipating a fast recovery.
In the news…
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