The Exodus of Crypto Miners from China is Bullish News
China has, once again, been interfering with the crypto industry. Most recently, the country has begun shutting down vast amounts of its Bitcoin mining facilities. This will result in an estimated 90% of mining closures in China.
This has caused many mining companies to relocate to areas that are more crypto-friendly. While the news may seem negative, there is actually a huge silver lining: if there are fewer bitcoin miners in China, then China’s influence on the crypto industry will be significantly diminished, meaning they have less effect on the price of the market going forward.
China’s Impact on the Markets
It is no secret that Chinese policy has a huge effect on the movement of the crypto markets. The current news about the Bitcoin mining exodus may have currently tanked the markets (as most coins and tokens have taken a hit recently), and something similar happened in May when unfounded fears about a Chinese Bitcoin ban caused a bout of panic selling.
One major reason why China has such influence is due to the sheer number of its miners. The country hosts around 75% of all Bitcoin miners, securing a 67% share of monthly total hashrates. This essentially makes China Bitcoin’s powerhouse.
However, with news that China is closing mining facilities, they are removing themselves from the equation and diminishing their power over the markets. It is causing miners to disperse to different locations around the world, which makes Bitcoin more spread out and decentralized.
The sheer number of Bitcoin miners located in China has been a cause for concern for some time now, as have people worried that it reduces Bitcoin’s decentralization. If the vast majority of miners are found in one place, then the whole network can become compromised (or at least harmed) by policy changes.
Crypto is strongest when it is most distributed, as it is distribution that fosters true decentralization. For this reason, the exodus of Bitcoin miners can only mean good news for Bitcoin in the long run, as it will help to make it more robust.
China’s Energy Concerns
The official reason China has been cracking down on mining companies is that it is in the process of trying to become carbon-neutral. As a result, they are curbing mining under the idea that miners are harmful to the environment.
This is a common argument against crypto (and Bitcoin in particular), with Elon Musk holding a similar sentiment earlier in the year. However, this might be a moot point. When considering Bitcoin’s energy output against the traditional banking industry, Bitcoin comes out as being much more eco-friendly.
Additionally, there is good reason to believe that a large portion of crypto miners use renewable energy already, massively reducing their strain on the environment. A 2019 study found that Bitcoin miners are “more renewables-driven than almost every other large-scale industry in the world.”
Of course, China’s hostility towards Bitcoin has been known long before this new carbon-neutral incentive. However, now, they have taken such an anti-mining stance that it is causing their global significance on the market to slip through their hands.
Among the many Bitcoin miners leaving is BTC.com, the 5th largest mining company in the world. In a statement, they announced that they would be moving their facilities to Kazakhstan. While this news about China may have harmed the markets at the moment, this is a sign that Bitcoin is about to get much more robust as a decentralized payment tool, and an overall sign of greater stability in the markets as China will no longer be able to trigger volatile spikes.
Do you think China’s ban on crypto mining is a good thing? Let us know in the comments!