Is Bitcoin Becoming the Victim of China’s Carbon Neutrality Pledge? What’s Next
China is the epic center of Bitcoin mining despite the government’s ban on Bitcoin and crypto trading in the country. Chinese mining pools currently contribute more than 60% of the Bitcoin network’s hash power, but that could change for good as the central government is increasing crackdown on Chinese provinces known for housing some of the biggest mining farms in the country. The recent crackdown is also being attributed to the government’s long-term pledge for carbon neutrality and the high energy consumption by these mining farms have already led many provinces in the country to meet their energy targets for the quarter especially the inner Mongolian province, one of the hotspots for Bitcoin mining.
The state government back in March had proposed to ban all Bitcoin mining activity in the area as well as heavy industrial work in April this year. Many insiders even claimed that the recent proposal is to curb fossil fuel-based mining in the country which could be a good thing in the long run as Bitcoin is paving the path for making renewable energy usage mainstream. Yesterday, the state provinces also issued notice to crackdown on Bitcoin mining and trading leading to heavy crypto market correction owing to panic selling by new traders.
Even though China announcing a crackdown on Bitcoin trading and mining is nothing new and has become a trend of the sort every bull cycle, the decision to ban mining could help in making Bitcoin mining more decentralized.
China Bitcoin Mining Crackdown is Good Thing in the Long Term
The crackdown on mining activities in China could potentially help make Bitcoin mining more decentralized. Large mining pools operators in the country are already looking to make a move and believe if the government proceeds with the ban, the mining activity could come down to levels seen in 2014-15 as only small miners with a couple of mining rigs would be able to operate from their homes.
Back in 2018, a similar order was issued following which large mining pools started to look for alternatives, and the likes of Iran, Afghanistan, and even the United States started to offer competitive electricity rates to lure miners to their respective countries. Iran and Afghanistan already have some form of regulations in place while the US is increasingly catching up with States such as Texas which has an abundance of clean energy supply.
A majority of new market entrants fell prey to the crackdown news, while it is a bullish indicator given the likes of the US always saw concentrated mining in China as a threat. If the Chinese government proceeds with the Bitcoin mining ban the network hashpower input would not only get decentralized, it would also become more transparent given most of the countries are looking to regulate the Bitcoin mining industry.
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