The China-Bitcoin conflict has long been linked to legislation. As news of China’s new restrictions once again makes headlines, it is necessary to once again compare the new regulations with the old ones.
to the Report CoinDesk, China’s first cryptocurrency law, dates back to 2013, when the government recognized bitcoin as a virtual asset but banned its use in transactions. In 2017, Chinese authorities also banned participation in the initial public offering of digital currencies (ICOs), which caused the price of bitcoin to fall temporarily. While the ban on bitcoin transactions remains in place, the latest concern about Chinese government legislation is the news of a ban on mining activities in some provinces.
Following the announcement of a ban on bitcoin mining in China’s Sichuan Province (the last province to ban mining-related activities), many miners were forced to relocate and migrate to other countries to protect their mining hardware. کردن. It is estimated that 90% of China’s mining capacity has been shut down following recent bans. This is very significant news; Because 80% of bitcoin mining power has already been in the hands of Chinese miners.
While the ban on mining activities in China has caused fear among investors in the digital currency market and pushed prices down sharply, many experts believe that China’s bans could help boost the bitcoin’s uptrend in the long run.
Here are three reasons why China’s recent bans are not as bad as they seem.
1. China has not banned bitcoin yet!
Chinese authorities have not yet forced Chinese citizens to hand over their assets to the government. The words “bitcoin” and “ban” have been used many times in recent Chinese crackdowns, but it should be noted that no ban has been imposed on bitcoin and other digital currencies.
China’s central bank is primarily concerned about the growing popularity of digital currencies, as this directly challenges the country’s economy and financial stability. As pressure mounts on the extraction and risky transactions of digital currencies, Chinese officials can hope that their economies will survive the horrific fluctuations in digital currencies. However, these wordings are not new. The recent crackdown on Chinese financial institutions that facilitate digital currency payments and bar them from providing services related to digital currency transactions is largely a repetition of the 2013 and 2017 regulations.
Although China has taken a more aggressive stance on bitcoin and digital currencies in recent months, some of these rules can be reversed. China banned digital currency trading in 2017 as the ICO market heats up; However, Chinese citizens resumed trading in foreign exchange offices operating in Japan and Hong Kong. As long as the custody of digital currencies is legal in China, there is always the possibility that Chinese citizens will look for a way to circumvent the ban on digital currency transactions, unless the Chinese government wants to enforce stricter laws and regulations. Change digital currencies as well.
۲. Decentralization of bitcoin mining
While the migration of bitcoin miners may disrupt the market in the short run, in the long run, the decentralization of mining makes the bitcoin network less vulnerable to legislation and action by different countries. It is estimated that 65% of bitcoin mining has already come from China. Now that miners have been forced to relocate to other countries, their dispersal in different countries will help allay concerns about China’s dominance of bitcoin mining.
In addition, the interference between bitcoin mining and China’s domestic policies is nothing new, and there have already been rumors in 2018 that mining will be banned in China. In May, Iranian President Hassan Rouhani temporarily banned all activities related to bitcoin mining and digital currencies, amid repeated power shortages and power outages across the country. This news, along with the fact that previously 4.5% of all bitcoin mining activities were carried out in Iran, affected the market, which is not desirable at all in the current unstable environment.
Although the volume of mining activities in Iran seems small compared to China, it can be said that the more scattered the miners’ activities, the less risks and complexities mining will face, and with the recent migration of miners, this is exactly what should happen.
3. Greener extraction industry
If, as expected, a significant portion of Chinese miners relocate to the United States, this migration could be a positive step toward reducing carbon emissions from bitcoin miners.
The state of Texas could be one of the main destinations for Chinese miners. The state is one of the cheapest regions in the world in terms of energy costs, has an increasing volume of renewable energy sources, and has a free electricity grid where any company, large or small, can generate, buy and sell energy. Perhaps the most important advantage of Texas is that it has Greg Abbot, one of the greatest digital currency politicians in the United States, as governor.
As you can see in the chart above, North America uses more diverse sources of energy than Asia and Oceania and relies less on coal. North American miners get 28 percent of their energy needs from coal, while Asia-Pacific miners use 65 percent of that fossil fuel. It also seems that North American miners are more connected to the public electricity distribution network, and this can increase the diversity of their productivity from different energy sources.
In addition, North America has provided more incentives for miners to use renewable energy, both in the open market and through government regulation, as the high energy consumption of the mining industry continues to be of interest to the general public in the United States.
Ilan Musk had previously announced in May that Tesla would stop accepting bitcoin as a payment method until its share of the clean energy industry reached 50 percent. In June, Massachusetts Sen. Elizabeth Warren criticized bitcoin for its negative environmental impact and called for increased regulation of the digital currency mining industry. Musk and Michael Silver, CEO of Microstrategy, co-chair the North American Bitcoin Mining Council. A group whose activities are to increase the legal transparency of the US mining industry, increase the use of renewable energy and improve the environmental aspect of Bitcoin.
Unlike the Chinese authorities, the legislation of the North American authorities will not be based on the “all or nothing” rule. President Joe Biden has included new requirements in his 2022 budget plan, which shows that the United States is moving toward a future in which the digital currency industry is heavily regulated but not completely banned.
Extraction over a period of several years seems to be moving towards greater use of alternative energy sources, which is a more sustainable way for the industry to thrive in the face of a total ban. China expressed its concerns about the environmental impact of mining, while the main problem was something else.
Finally, the ban on the extraction and re-restriction of digital currency transactions in China is an example of the problems that investors have always had with bitcoin and digital currencies in general. For all the promise, innovation, and creativity that this technology brings to the digital age, there are always obstacles, such as government legislation, in the way of this industry. However, these are mostly considered short-term obstacles in a long-term game. Those who have the ability to make digital currencies like Bitcoin more powerful are doing as much damage as they can.