Is China’s ban on cryptocurrency mining really a bad thing?

It may cause problems for cryptocurrencies in the short term, but in the long run it will actually make Bitcoin and indeed all cryptocurrencies more efficient and decentralized.

Recently, the Chinese government has once again taken a firm stance and decided to step up its policies against bitcoin mining out of concern for retail investors, digital yuan issuance, and environmental concerns. This may cause problems for cryptocurrencies in the short term, but in the long run, it will actually make Bitcoin and indeed all cryptocurrencies more efficient and decentralized.

Throughout Bitcoin’s history, China has been on the cusp of technological innovation and digital asset mining, in part because mining hardware companies like Bitmain are located in China. since 2017, China has begun regulating crypto trading activities. Currently, retail investors are not allowed to participate in trading digital assets due to risk protection for investors. 2021 Vice Premier Liu He proposed a crackdown on cryptocurrency mining at a meeting of the State Council’s Financial Stability Development Committee, which he chaired. The policy set off an uproar in the Chinese mining industry, and many bitcoin mining plants have continued to be shut down across the country, including in Inner Mongolia and Xinjiang.

Is China's ban on cryptocurrency mining really a bad thing?

The reasons for this crackdown are as follows: One, China is about to release a digital yuan, and other cryptocurrencies would threaten its dominance. If only one digital payment can be used, the digital yuan will definitely compete fiercely with bitcoin. By the time the digital yuan is rolled out nationwide, the government may lift its crackdown on cryptocurrencies like bitcoin and allow them to become popular again. Second, China wants to achieve its goal of carbon neutrality by 2060, and bitcoin mining’s heavy use of coal-fired power generation runs counter to China’s goal of saving energy and reducing emissions, so most of the mines shutting down are from provinces that use coal fuel. Miners in areas that now use hydroelectric power or other clean energy sources continue to operate, but some still feel threatened by the policy and decide to leave China.

The move has led to a massive exodus of bitcoin miners, and also resulted in a significant drop in bitcoin arithmetic (the bookkeeping power in the bitcoin blockchain, in which miners are rewarded with a block of bitcoins for figuring out a target hash first) and a subsequent drop in the security of the bitcoin network. At the moment, although a hundred harms but no benefits, but in the long run, mining transfer is actually beneficial to the future development of bitcoin.

Prior to the crackdown on bitcoin mining, about 65% of the bitcoin computing power in the entire bitcoin network came from China. And China controlled most of the bitcoin arithmetic, to the detriment of the network health of cryptocurrencies in other countries. And now, those miners are being forced to disperse around the world, which also means that the pie will be reprogrammed.

The exodus of cryptocurrency mining helps address carbon emissions and environmental concerns. Now bitcoin advocates like Tesla are also saying they will no longer accept bitcoin for cars until the environmental pollution problems of bitcoin mining are solved.

Is China's ban on cryptocurrency mining really a bad thing?

A single bitcoin transaction has a carbon footprint of 750kg, which is equivalent to the electricity consumption of an average American household for 54 days. For socially responsible investors, the huge amount of resource consumption can be a deterrent. Using green energy to reduce carbon emissions would be a way out for Bitcoin to get more investment and for digital assets to be sustainable in the future. Bitcoin miners leaving China will go where the electricity costs are cheapest, and renewable energy is currently the cheapest.

Is China's ban on cryptocurrency mining really a bad thing?

This crackdown on cryptocurrency mining in China will cause market volatility and a drop in bitcoin counting power in the short term, but has a positive impact on future development. Most cryptocurrencies and mining are still in their infancy, and something like this is just a small stone in its path to the world.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/is-chinas-ban-on-cryptocurrency-mining-really-a-bad-thing/
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