It’s no secret that last year, crypto mining went from a craze to “avoid at all costs” business. While the business isn’t currently profitable, China is about to ban crypto mining. China’s National Development and Reform Commission (NDRC), shared its desire to completely eliminate crypto mining.
The sectors who currently have undergoing mining activity, will have a public consultation period until May 7th. This effectively means that some Chinese mining facilities will be operational for about 2 or 3 months.
After the public consultation phase is over, the NDRC and the Chinese government will probably proceed to ban crypto mining. The entire crypto mining sector will be closed and this would mean that the strongest bitcoin mining region in the world is no more.
That being said, a crypto mining ban in China would leave a huge power void. This will most likely result in a decentralization of the global mining market. Chinese miners who want to continue their business or hobby will also be more incentivized to move to other counties.
Some of the biggest mining pools like Antpool and BTC.com are operated by Bitmain and based in China. These pools have had steady dominance over the hash power of the entire bitcoin network. Antpool and BTC.com have over 31.6% of the entire hash power of the network.
If China does ban crypto mining, some companies might not survive
There is a huge probability that a crypto mining ban in China would be fatal for Bitmain. Even though recently the company has attempted to diversify its holdings, the majority of its revenues are from selling miners.
After the major layoffs last year, Bitmain decided to reduce its global operation for focus more on domestic operations. An investment of over $500 million, which would have transformed the Lone Star State facility into the largest and most modern crypto mining farm in the United States, was suspended.
If that wasn’t enough, Bitmain’s domestic rivals are also not giving the company a break. Ebang is already scheduled to manufacture over 400 000 blockchain processing units this year.
Mati Greenspan, analyst at eToro stated:
If this ban does end up happening its more likely to push BTC prices up than down.
The loss of cheap Chinese electricity would raise the mining cost, which is net positive on price.
It would also serve to kill the FUD that Bitcoin mining is centralized.https://t.co/OhVh8fUaXv
— Mati Greenspan (@MatiGreenspan) April 9, 2019
There is a lot of discussion whether or not China will offer a highly regulated crypto market. The possibility is without a doubt there, but at the moment, it seems that the government’s biggest goal is to ban crypto mining as soon as possible.
You can also check out:
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- Ripple Finastra Partnership Announced: Future of Finance - Oct 17, 2019
- Chinese Monopoly is a Real Possibility if Libra Fails to Launch - Oct 16, 2019
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