China can be considered as a major roadblock for the development of cryptos. In fact, Bitcoin trading is banned in the country as well as initial coin offerings. The massive crackdown started during the bull run in 2017. One of the things seen by experts is that China is looking to prevent capital outflow as more Chinese dive into the world of cryptocurrencies.
But despite the reputation that China had in the crypto community becoming a challenge for the industry, it is still the epicenter when it comes to crypto mining activity. In fact, during the time when Bitcoin’s price slumped by more than 80%, Bitcoin miners running large-scale operations were among the few that were generating income.
Now, the Chinese authorities are looking to ban crypto mining in the country. The National Development and Reform Commission included crypto mining in its list of wasteful and hazardous activities. Crypto mining has been included among 450 other wasteful activities pointed out in the list.
Crypto mining is an energy-intensive activity. It is a necessity in the world of crypto since it is used to validate transactions. According to past reports, Bitcoin mining worldwide can power an entire country.
If the proposed ban comes into reality, there is a chance that authorities are going to enforce the ban after May 7.
Time to Have an Impact
According to Katherine Wu, who is a prominent cryptoanalyst, she thinks that the proposal will take some time before it could make an impact. She mentioned the past crackdowns especially in 2017 when the Chinese government banned the crypto exchanges from operating in China.
Now, getting in the list of wasteful activities is quite normal. This trend began in 2005 and the list has been updated every now and then. However, there are industries that would have a less severe suggestion than “immediate elimination”.
Spreading Operations Worldwide
This has been anticipated by different mining firms. In fact, there are crypto mining companies that have targeted other countries. For instance, you have those Chinese companies that went to Canada. Among the companies that were able to take precautionary steps include Bitmain. Last year, Bitmain was able to expand its operations in parts of the US including Washington, Tennessee, and Texas.
Despite the size of Bitmain’s operations, they have also been affected by the bear market. They announced in January that they were laying off employees. And also, they suspended the plan to open a new facility in Texas. However, the plan was then put back in March.
Healthy for Bitcoin?
There are those like Ben Kaiser who is a Princeton researcher who thinks that this is actually healthy for Bitcoin. This could potentially get the difficulty level to decrease significantly in case China decides to ban crypto miners. Since 2013, there were a number of miners that have populated areas such as Sichuan province in China given the low energy cost in the area.
Without the large miners, it could mean that small-scale miners can potentially compete against their large-scale counterparts.
Given the fact that the bull market is back, could it mean that there will be more people turning on their mining rigs as well? The potential ban on crypto mining activities in China could easily have a great impact in today’s crypto industry’s climate.