The latest crackdown has compelled many bitcoiners to scramble for the exits. Jim Cramer, for example,sold “almost all of my bitcoin” after getting spooked. One Twitter userpointed out that many of bitcoin’s critics refuse to buy the asset “because China controls it” – while others sold “because China banned it.” So, is the latest ban “short-term negative, long-term positive” as Skybridge founder Anthony Scaramucci suggests – or is the industry set for a protracted period of turbulence and uncertainty? What exactly has China done? Even with all that, after falling below $30,000, crypto saw a nice 15% bounce to defy the doomsayers. Who knows what the future holds? What we know with certainty is that miners aren’t an easily discouraged bunch. And countries with an abundance of stranded or wasted energy resources should prepare themselves to jump at the prospect of raising significant revenue via bitcoin mining. China has never been a fan of bitcoin. The Communist nation’s leaders have been sounding warnings, imposing restrictions, closing exchanges, and threatening bitcoiners for over a decade. China FUD – fear, uncertainty, and doubt is a propaganda tactic generally aimed at influencing perception by disseminating negative, dubious, and/or false information in order to appeal to mass fear. As far back as December 2013, the People’s Bank of China became allies with the nation’s financial watchdogs and slapped a ban on banks handling bitcoin transactions. Despite that, the love affair between Chinese users and crypto has grown more intense over the years. At present, anywhere between 50-65% of global bitcoin mining is performed in the country, and Chinese traders and investors carry enormous influence on the market. Analysts are left wondering if recent events could represent an inflection point. Ostensibly, China has ordered banks and payments platforms to stop supporting digital currency transactions, with directives also issued to halt bitcoin mining in Sichuan – where many of the country’s largest mining farms are located.
The latest instance of China FUD precipitated bitcoin’s fall below $30,000 for the first time since January. Some are wondering if the nation profited from falling prices. Everyone has a different perspective on China’s latest crackdown: It’s the death cross for bitcoin; it’s a bump in the road while miners decamp to countries that can offer cheap energy; it’s a golden opportunity for miners in other countries; it’s a China flex ahead of their long-anticipated CBDC release. With Xinjiang and Sichuan shutting down several gigawatts of coal-based bitcoin miners, there is another possible outcome: the network gets greener. Of all the blows aimed at bitcoin over the years, criticism of its energy footprint probably has the most traction. Even if those arguments can be disspelled, still, with less network processing power concentrated in the region, some firmly believe that bitcoin’s environmental profile will improve. This depends where the bitcoin miners fleeing China wind up settling. One of the companies left scrambling due to the CCP’s directive was Bit Mining, a publicly-listed Chinese mining firm that has quickly dispatched over two and a half thousand rigs to Kazakhstan. All of these are expected to be powered up in their new location by the start of July. Bit Mining has also started investing in mining facilities in Texas, where fossil fuels and wind power are quite abundant. Beijing-based mining giant Canaan has also set up a base of operations in Kazakhstan, crediting the region’s famously low electricity rates; however, over 70% of Kazakhstan’s electricity supply is coal-powered. The region already ranks fourth in the world for hashrate distribution, behind Russia (3rd), the United States (2nd), and China. Aside from Kazakhstan, the U.S. is likely to see a mining boom, thanks to bitcoin’s downward difficulty adjustment, and North American miners will earn higher margins, incentivizing participation from others keen to get in on the act. Though Texas is the obvious beneficiary, one Chinese logistics firm has reportedly airlifted 3 metric tons of mining rigs to Maryland. That may be a small amount of hashpower all-in-all, but it does prove that Texas isn’t the only game in town. Bottom-line: what will be China’s loss, will prove to be others’ gains!
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Source: https://www.blockleaders.io/digital-asset-insights-22/
