Bitcoin miners are looking for ways out and alternative destinations to keep their business afloat.
China's most recent regulatory crackdown on digital currencies caused the digital currency market to collapse, wiping out nearly $ 400 billion of their total market value.
Bitcoin's "Great Leap Back"
On June 21, the People's Bank of China asked banks and payment companies to investigate and close the accounts of people involved in crypto transactions. The government previously announced that it would crack down on cryptocurrency mining operations in Sichuan province.
These are the strictest crypto regulations that China has issued in recent months.
SupChina reports that China's four major mining pools, AntPool (F2Pool), Huobi Pool, and Poolin, have contributed more than half of global bitcoin processing power over the past twelve months.
This is why bitcoin fell to $ 28.600 in the wake of these stocks. It was the lowest point since the beginning of 2021. It is now trading at $ 34.945, 81% lower than its peak on April 12, 2021.
China holds nearly 70% of Bitcoin's global mining capacity. More than 100.000 miners are involved. However, 90% of those miners closed as a result of the crackdown.
The hash rate of cryptocurrencies - which is the collective computational power that runs the network and measures how fast and smoothly and how difficult it is to mine new coins - is a major blow.
From June 1 to June 29, Bitcoin's hashrate dropped nearly 40% to its lowest point in 13 months. The most optimistic take advantage of it for invest in bitcoin now that prices are lower. Others, on the other hand, are worried.
What is the motivation for China's recent actions?
Unsurprisingly, China has attacked digital currencies in the most recent attacks. The government outlawed Bitcoins in 2013 as a means of purchasing goods and services. The nation banned initial coin offerings in 2017, which is the fundraising process for new coins.
China appears to think virtual currencies are a threat to its economic stability due to their volatility and potential use for money laundering. If we look deeper, it is possible that China's aggressive stance stems more from its fear of losing its monopoly in currency issuance.
China is developing the digital renminbi (a centralized and state-backed virtual currency) to keep its money supply in check. China may perceive Bitcoin private ownership and decentralized control as competition.
China's desire to become a global leader in green energy could contribute to this change. China's Sohu News reported that a high-quality mining platform consumes more than 2.000 kilowatt hours per month.
This is roughly double the amount the average American homeowner uses over the same period. It also represents about six months of electricity for the average Chinese family.
All this for a computer. China's goal of becoming carbon neutral in 2060 is not supported by this energy consumption and the pollution it causes.
