Global Bitcoin Industry Gains More Than Its Losses Because Of Last Year’s Ban In China

Global Bitcoin Industry Gains More Than Its Losses Because Of Last Year’s Ban In China

Many experts in the crypto world were predicting that the bitcoin industry would never rebound after a severe crackdown by China on mining and trading.

Surprisingly, the prohibition helped to illustrate both the sector’s resilience and the entrepreneurial spirit of the miners who keep the blockchain’s wheels moving.

The restriction on bitcoin in China was imposed for a variety of reasons. Not only were lawmakers and regulators alarmed by the digital asset’s volatility, but they were also frustrated by the powerlessness they felt to influence and regulate it, as were other governments around the world.

Furthermore, the energy-intensive nature of bitcoin mining threatened to jeopardize Beijing’s pledge to achieve carbon neutrality by 2060. According to some estimates, coal-based power supplies were used for about 40% of the bitcoin mining activities in China.

It was however quite evident that the actual aim of the Chinese authorities behind the crackdown on cryptocurrency was that the Chinese Communist Party (CCP) was actually quietly directing attention to its own government-backed digital currency.

Experts predict that the Chinese central bank – the People’s Bank of China (PBOC) will be the first to implement a full-fledged Central Bank Digital Currency (CBDC).

Crypto miners in Chinese provinces such as Xinjiang, Inner Mongolia, Sichuan, and Yunnan were forced to immediately shut down their crypto mining rigs and migrate to new pastures in Kazakhstan, Russia, and North America, in what has been nicknamed the “great mining exodus.”

However, the self-imposed exit of China from the crypto mining industry is being viewed in a positive light because of the events in the crypto world that happened next.

Some of the most notable events in the crypto world that happened since the Chinese crackdown included bitcoin reaching a new all-time high value of more than $68,000 in November last year. The bitcoin futures exchange-traded fund (ETF) was launched in the United States which allowed crypto investors to purchase and sell exposure to the asset outside of traditional exchanges. Also, blockchain hashrates have rebounded to levels seen in May when a blanket ban on cryptocurrency trading, mining, and related activities were imposed in China. It also resulted in the United States becoming the dominant crypto mining hub of the world.

The importance of the last fact cannot be overstated. The major global crypto mining location is no longer based in an authoritarian regime but in a democratic one. Furthermore, whereas Chinese politicians toed the line and vilified bitcoin at every turn, numerous US policymakers have embraced the asset class, laying out plans to accept bitcoin as a form of payment for taxes and even allowing employees to receive their salaries in bitcoin.

The declining influence of China on the crypto mining sector is therefore likely to calm US investors. Especially considering companies like Lancium are significantly investing in renewable-energy bitcoin mining in Texas.

The United States is an especially attractive option for crypto miners, as certain states in the country have among the lowest electricity prices in the world. There are also other renewable energy trading options that can help to alleviate concerns about bitcoin mining’s long-term environmental viability.

Over the next year, almost 16 gigawatts of new wind and solar projects are expected to be built in West Texas which will also add to the attractiveness of the location.

The desire to become more energy-efficient is a big trend that Valkyrie Investments, a large crypto asset management organization, is keeping an eye on this year. The firm is looking at “the concerns over sustainability and meeting ESG criteria,” said Leah Wald, CEO of Valkyrie Investments, on the ETFs 2022 webcast hosted by ETF Trends and Investopedia. “We’ll see that emerging class of publicly traded bitcoin miners also increasingly relying on renewable energy sources.”

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