A high-ranking Chinese official, speaking at the next meeting of the State Committee of the People's Republic of China, noted that it is necessary to limit the extraction and trading of cryptocurrencies
According to Deputy Prime Minister Liu He, it is necessary to protect the financial stability of the country. To this end, regulators must actively monitor and prevent any risks to the financial system. Simply put, we need to fight BTC mining and trade.
Immediately after the publication of this information, the value of Bitcoin fell on the leading exchanges. On Binance, BTC has been trading at $37,000 since the fall. So far, the price has not been able to recover.
Here's what the fall looked like on the CoinMarketCap chart
This is the second time in a week that news from China negatively affects the value of Bitcoin. Recall that on May 18th, before the recent market collapse, the Chinese authorities said that they support the ban on trading cryptocurrencies and plan to ban banks from any transactions with cryptocurrencies.
China has a complicated relationship with mining. This area of activity brings excellent income. Therefore, when in 2017 the People's Bank of China banned the activities of crypto-exchanges in the country, mining remained untouched.
China for 5 years formed a powerful mining base. The Chinese confidently led in the Bitcoin hash market. This figure was over 60%. However, in 2021 everything has changed.
First, mining banned Inner Mongolia. Then in April the topic about the dangers of mining for the environment began to be intensified. Allegedly, all china's efforts to reduce the carbon footprint, in one fell swoop devalue numerous mining enterprises.
Thus, today's statement of the Deputy Prime Minister is not unexpected. The interest is the fact that this is the first time that a high-ranking official has said about the dangers of mining and the need for a ban. And yet these are words, not an official ban.
As for cracking down on mining, it may be related to Musk's recent attack on Bitcoin's energy consumption. The Chinese government made a commitment to carbon neutrality to the world last year. Unfortunately, Bitcoin mining was the first to hit.— Wu Blockchain (@WuBlockchain) May 21, 2021
What will happen to Bitcoin?
In April, when a coal mine accident occurred in the Xinjiang region, Bitcoin's hashrate fell by 1/4.
If China bans all mining enterprises or the part that uses energy from non-renewable sources (oil derivatives, coal), it will seriously damage the stability of the Bitcoin blockchain.
Serious delays in transactions, huge commissions all await Bitcoin in the foreseeable future. It will take time to deploy additional mining facilities in other states that will agree to accept "refugees" from China.
How soon will it be? This question is still open. However, the seriousness of the intentions of the Chinese Government is evidenced by the fact that from this week in the region of Inner Mongolia, where mining is banned from 2021, criminal penalties for this type of activity are introduced.
Miners will be prosecuted. Perhaps this year such punishment will be in effect throughout China. Let's see…
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