This is the first time that Bitcoin has rallied to less than $30K. This has happened after the continuous uptrends that the crypto coin has been seeing since last year. The currency price is half of what it had exactly 90 days ago. Some people speculate that this is happening because China, which also happens to be the biggest country in bitcoin mining, will ban cryptocurrencies once and for all. This is what we have dug out till now.
While we do not know whether China has wholly outlawed the crypto coin, we know that the government has constantly been putting out warnings about mining and trading cryptocurrencies. The government has told the country’s financial giants that they will have to stop dealing in crypto.
Since then, there have been reports about the major mining regions of the country. They have been putting crypto miners down, and on top of it, the government is constantly meeting with significant banks again and again. Just this week, they have had two meetings, and the agenda was the same. Stop crypto-related transactions at war footing.
There have been reports that the most significant mining thumbs of china are getting shut down.
These reports indicate a considerable probability that the world will be less productive in cryptocurrency mining from now on. The University of Cambridge has estimated that more than 70% of the bitcoin hash rate is operated from China. There are three central provinces there that provide the computing power for the same.
These regions look like they have been following the government’s guidelines to put down crypto mining. The area called Xinjiang has the maximum mining average, according to Cambridge. That, too, is on the verge of a breakdown.
Another region in Mongolia has already begun the process to put a total mining ban on institutions that do so. The province of Sichuan made sure that mining was banned entirely and directed the electricity providing firms to cut any power that is provided to any of these firms so that the so-called destructive process can be locked down. The province of Yunnan and its government is also rumoured to call out the electricity providing firms previously accused of making illegal and side deals with miners.
All three significant provinces have stopped mining to almost 80%.
The massive role of Xinjiang in global crypto mining was taken back home in the summer of 2021. After one plant was supposedly flooded, the whole palace had to be shut down for more than three days.
This resulted in a reduced capacity of the entire planet by more than 30%. Some people always ask how much China will go down in bitcoin mining if all of these stations go down; well, the answer is more than 90%. To understand it in simpler terms, the crypto mining of the whole planet will go down to a third of what it was previously doing. The entire process will be abrupt for around six months.
The prices of GPUs in China have fallen to a considerable level. This is because these were previously used in mining. Now that mining is almost out of the picture, the price is natural to fall.
The market and miners both have reacted negatively to this whole idea of taking cryptocurrencies down. Just last week, a leading daily newspaper reported a “huge migration in mining” that was in process. This was after they spotted some of China’s biggest miners packing their stuff and leaving for other countries. Their top priorities were either the US or Kazakhstan. Others were seen selling their mining gear at cheap prices, primarily to foreign buyers.
Since the government’s moves in last May, the prices of graphic processing units have fallen hugely. This is obviously because there has been a constant rise in miners who don’t have a job anymore. As evident, the price of cryptocurrencies like Ethereum and bitcoin has also fallen like the covid wave in India.
This is also the aftermath of the moves that the government has recently made. Since may ethereum has halved in its value and Bitcoin, everyone knows about what happened to bitcoin. However, some experts also believe that the price of bitcoin will rise, no matter how much it falls or plummets.
Apart from china’ moves to ban crypto coins, factors like Elon musk also have a huge role to play here. The tech mogul first lauded many different cryptocurrencies and made a public notice that he and his firm will take Bitcoin as a legal tender and mode of payments.
Soon after, he tweeted that the mining of cryptocurrencies is not suitable for the environment, and he will no longer accept the coin as legal tender. Some experts claim that this is the most giant pump and dump in the history of the markets.
The officials from the Chinese government say that they are acting so late because of the sudden volatility that is being seen in the bitcoin prices. There are also many illegal dealings on the dark web, and all the payments are made via cryptocurrencies.
Some experts believe that the mining of cryptocurrencies directly contradicts the Chinese government’s aim to be the leading power in green energy, with India next to its side as the biggest competitor. The government aims to be carbon neutral by 2060. It is also worth noting that the country is also in the works to develop its decentralised cryptocurrency.
The Chinese have been making their grip tighter on cryptocurrencies for a long time now. The government had banned the banking related transactions that involved Bitcoin back in 2013. Also, it had banned initial coin offerings in 2017.
The country had made one of the most unprecedented moves to banning bad dealings, and this may be one of those.