China has decided to clamp down on the crypto-mining scene in the country. The National Development Reforms Commission (NDRC) in China has stated that crypto-mining is a “waste of resources” and it pollutes the Environment.
The decision to eliminate or ban the mining business in China is open for consultation and public opinion till May 7, 2019, post which the Government will continue on the clamp down.
China: World’s Most Dominant Crypto-Miner
Reportedly, China controls more than 60% of the total Bitcoin mining hash rate. The reasons for the development of the mining scene in China are:
- A plethora of chip manufacturers who can design and build mining hardware.
- Cheap Electricity: China and India due to its population and economic condition have levied very low charges on Electricity costs.
- An abundance of Coal: China apparently has a huge reserve of coal that can be used to power the miners.
- Technological Innovation: China is one of the largest manufacturers of technological hardware in the world because of its cheap and skilled labor. Moreover, the Chinese businessman saw the potential of mining early in 2012-2014. Therefore, over the years, huge mining farms have been established within its borders.
China subsequently hosts four of the biggest mining pools in the world: BTC.com, Antpool, F2Pool, and the Unknown Pool which is also located in Main China according to findings. Hence, together they account for more than 61% of the total mining hash power in the world.
Moreover, there are other individual miners and smaller pools in the country as well. Hence, possibly China holds around 70% of the mining power in the world.
Possible Effects of the Ban on the Price of Bitcoin
A ban of the entire Bitcoin and Cryptocurrency Mining business in China is expected to have a substantial negative impact on the network as the hash rate would plummet.
The price of Bitcoin [BTC] at 13: 00 hours on 9th April 2019 is $5206. It is trading 30.15% higher from the 4000 dollar mark it has held during the second half of March. Hence, the ban might hinder the growth of the business and Bitcoin could plummet to new lows.
However, Mati Greenspan, a Senior Market Analyst at eToro has expressed that the move by the Chinese Government would only help the price and fundamentals of Bitcoin.
“If this ban does end up happening it’s more likely to push BTC prices up than down. The loss of cheap Chinese electricity would raise the mining cost, which is net positive on price. It would also serve to kill the FUD that Bitcoin mining is centralized.”
Moreover, in the long run, as the total mining difficulty would decrease due to the reduced number of miners. It will provide with a global opportunity for people around the world to set up miners. It will especially favor developing countries like India, Brazil, South Korea, and Canada which have comparatively cheaper electricity cost in the country.
Do you think that other Governments would support the mining business or follow the footsteps of China is banning it altogether? Please share your views with us.
Nivesh from Engineering Background is a full-time Crypto Journalist at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com