It all began in 2013 when the Chinese government recognized bitcoin as virtual property but banned it as a transaction medium. Then in 2017, China banned Initial Coin Offerings (ICOs) and forced local exchanges to shut down. And now in May 2021, the Chinese government has demanded strict crackdowns on Bitcoin mining and trading.
The Great Mining Transition
China has launched what the cryptocurrency world is calling the “great mining transition”. Mining is an energy-intensive process that generates new coins and maintains a record of all transactions on existing digital tokens.
Looking further to crack down on the practice of “transmission of individual risks to the social field” as per Vice Premier Liu. Punishments for companies involved in digital currency mining are laid down.
According to the new directives, companies should not offer any services to clients involving cryptocurrency such as trading, settlement, currency exchanges, clearing. Institutions are also prohibited from providing crypto saving, trust, or pledging services.
Ripples in The Market
This practice is exceedingly forcing the Chinese minors to create an exit. Many Chinese are selling their cryptocurrency to hunt for investment opportunities abroad. While some are selling their bitcoins to exit the crypto market.
The greener pastures motivate the large miners, to move that offer the cheapest power sources in the world where variable costs are conventionally energy only. The most possible destinations are Kazakhstan (China’s neighbor) and Texas.
Kazakhstan and Texas provide cheap and abundant energy supply, paving an easy way for minors to set up a mining company. They also have favorable regulatory regimes.
China represents approximately 65% of Bitcoin mining worldwide.