Bitcoin mining expected to become easier amid China’s crackdown
The Chinese authorities are full-in with their fight against crypto mining. The country has recently closed down leading miners in the country and called on them to leave the country as fast as possible. Once the leader in bitcoin mining, China claimed that mining was among the biggest contributors to the country’s environmental footprint. The crackdown started almost a month ago, which has led to the largest bitcoin miners in the country stopping mining. The authorities issued a special letter to all the miners, telling them that they had to go ASAP. Although some thought that authorities in the leading crypto-mining parts of the country would be lighter with new rules, they were proved wrong with Southwest China’s Sichuan Province authorities going as far as cutting off electricity from miners. As China’s miners went offline, the amount of computing power used by bitcoin miners has fallen sharply. This left the market less crowded for those who continue mining.
Active miners to be more profitable
Because of the fewer people mining, bitcoin mining is expected to become much easier for active miners in the market. This could happen as soon as this weekend. The most recent crackdown on cryptos in the country knocked out a huge majority of the computer power used in the market. The official data from Glassnode indicates that the computing power used to secure its blockchain network dropped to 94 exa hashes per second on Sunday. This is the lowest level for the company since May of 2020. That said, the price of bitcoin has also fallen. The main contributor for this negative momentum was the massive Chinese crackdown in addition to increasing environmental concerns around energy use in the market. This has left the market as well as investors in less favorable condition, specifically because the view at a larger scale towards crypto has changed. Glassnode claims that due to the larger chunk of computing power going offline, the difficulty of mining crypto could drop as much as 25 percent. The company plans to issue the next adjustment on July 3. This means that the miners still active in the market could become even more profitable in the next few weeks.
Influence on trading
Steps taken by the Chinese government have had a huge impact on the crypto trading market, specifically on the price of Bitcoin which last month dipped below $30,000 for the first time since January. Although the prices have somewhat recovered from the huge dip, experts are not expecting a huge boom any time soon. That said, crypto trading popularity is at its heights as of now, with millions of people being part of it. The main reason for the increasing popularity of crypto trading is how easy it has become to be part of the market. While crypto exchanges offer traders the ability to buy and sell digital currencies in a matter of seconds, trading automation is further popularizing the market. There are numerous software companies that are creating trading robots that help traders better analyze the market and trade cryptos even more efficiently. Such trading tools can not only analyze the market but trade for investors as well. As of now, anyone can use a bot for trading which makes investing in crypto a lot easier. However, the steps were taken by the Chinese government still had their influence on the prices. In addition, the concerns around the effect of mining on the environment are increasing as well. A few months back, Tesla announced that it would halt receiving payments using bitcoin or car purchases. Last month, company CEO Elon Musk said that Tesla would consider introducing bitcoin payments if enough miners start using clean energy.
Impact on the western world
The Chinese crackdown can be specifically impactful for the western world. The mining crackdown in China is expected to have a huge impact on miners in Canada and the US. Generally, North America could see a huge moon in mining activity. The main reason for this is that former Chinese miners are highly expected to migrate into the region mainly because of the lower political risks. It is highly expected for a part of the Chinese miners to migrate to the USA, specifically in Texas. The main reason for this is the cheaper electricity in the state, which is a perfect thing for crypto miners, who need large amounts of energy to function. Another factor for Texas to be the possible location for the crypto miners from China is the state’s friendliness towards cryptocurrencies. The leaders in the state have shown a huge interest in the crypto market, including bitcoin over the past few months. This paired with low electricity prices could create a perfect environment for crypto miners. Chinese authorities did not only aim at crypto miners but the whole market in general. The People’s Bank of China has made a statement that all major financial bodies in the country should stop facilitating transactions in digital currencies. That said, there already are some signs that the miners leaving China are already restarting their operations in other parts of the world. For example, one of the largest manufacturers of crypto mining machines, Canaan Inc said last week that the company has already set up a base of operations not far from China, in Kazakhstan. Another China-based company, BIT Mining, has also announced that it has shifted activity towards Kazakhstan.