The United States has replaced China as the world’s largest Bitcoin mining giant after Beijing announced that they would ban the mining practice and restrain the overall crypto market in China.
According to a recent study published by the British Cambridge Centre for Alternative Finance, the USA now accounts for more than 35% of the global share of Bitcoin mining. This figure is far higher than the previous year when the US accounted for only 4.2% of the global Bitcoin mining share.
After China’s withdrawal, Kazakhstan is now the world’s second-largest producer of Bitcoin, followed by Russia.
Bitcoin Mining in China
Cryptocurrencies first appeared in China in about the year 2008. Chinese banks began to restrict the use of these decentralized digital commerce tools in 2013.
By 2016 Chinese banks came up with regulations prohibiting the use of digital currencies. On September 24th, 2021, China decided to put a full stop to the practice and altogether forbade it.
As shared by Crypto Dispensers, bitcoin mining in China has previously dominated the global supply chain. In 2017, when cryptocurrency experienced one of its highest hikes, the most profit-making investor portfolios were from China.
At one point, 50% of the world’s Bitcoin miners were based in China. Most of these Bitcoin mining sites have relocated to countries like Kazakhstan, causing a crypto mining rush.
China’s ruling against Bitcoin mining was curtailed by a series of regulatory crackdowns from Beijing due to environmental concerns, which resulted in China banning the practice this year.
China’s concern over crypto mining
Bitcoin mining is how new Bitcoins are created. To mine more bitcoins, the miners need high-powered computers. These high-powered computers verify the transaction for virtual coins.
Like most cryptocurrencies, Bitcoin operates on what is known as a blockchain. The blockchain is primarily a public ledger. It contains the history of every single transaction. Miners’ computers solve complex mathematical problems to add new blocks to the chain and earn digital rewards, making the plan more profitable.
Computers use an enormous amount of energy and raise environmental concerns because of the levels of energy used. With the maximum amount of digital assets being mined in China, the problems increased over time. China believes that the extravagant use of energy in mining is obstructing its sustainable environmental goals.
Moreover, Chinese government agencies have constantly raised concerns that cryptocurrency speculations can disrupt the economic and financial orders of the country. Experts state that China views cryptocurrency as a threat to its sovereign digital Yuan.
An unpopular opinion also highlights China’s skepticism with cryptocurrency due to its belief that the power controlling this highly volatile decentralized currency lies in the hands of the United States of America. They prefer to eliminate this kind of competition.
China’s ban on cryptocurrency
Earlier this year, the People’s Bank of China declared that Bitcoin mining and other cryptocurrency transactions were illegal. All the online services that offer trading in cryptocurrencies and overseas cryptocurrency exchange were banned.
Exchange platforms like Coinbase and other Coinbase alternatives soon began to withdraw their operations from China. This withdrawal was initiated after Chinese Deputy Prime Minister Liu called on the government to “crackdown on Bitcoin mining and trading behavior, and resolutely restrict the transmission of personal risks to the social field.”
The effect of China’s withdrawal from the cryptocurrency market
Initially, China’s decision caused the value of Bitcoin to fall to $41,000 (USD), although since then, Bitcoin and other cryptocurrencies have turned that loss and risen back up.
The new restrictions on cryptocurrencies follow regulatory measures that contradict the Chinese government’s integrated budget. In May, Chinese Deputy Prime Minister Liu called for the abolition of mining operations and the conduct of bitcoin, and strictly prevented the transfer of individual risks to the social sector.
After China’s announcement of the crypto ban, Ethereum, Ripple, and some other cryptocurrencies were also affected with a drop in value, however, most of them have now recovered from the same.
At the time of writing, Bitcoin is trading at $62,464 (USD) and is consistently developing bullish patterns. Ethereum, the second-largest cryptocurrency in market price, has risen more than 56% in the past six months.
The world is moving on from China’s ban, and the US is leading the way in the cryptocurrency market. More than one-third of the global computing energy reserved for mining Bitcoin is now generated from the US alone.
US-based Bitcoin miners have doubled their power consumption in the last quarter of the year. It will be hard for another country to take the crown for Bitcoin mining away from the US, provided China’s ban stands.
How have exchange forums reacted to the ban?
Cryptocurrency trading platforms have been cutting off users from China after the country announced the brutal seizure of digital assets last week.
The trading company Binance has announced that it no longer accepts the registration of new accounts from China. The company’s domain has been banned in China for years, and now it also restricts registration from cell phone numbers belonging to Chinese telecom companies.
The People’s Bank of China has stated that every cryptocurrency-related action is now illegal. Online services that offer trading in cryptocurrencies and foreign exchange in cryptocurrency are banned. Beijing has also voted to rid the country of any cryptocurrency mining within its borders.
TokenPocket, a digital wallet for cryptocurrency storage, announced that it would also cut off certain activities for China-based users. The company said it preferred to follow regulations as per the instructions from Beijing.
Even though the digital currency market has gone underground in China, the country has ideas about releasing its own digital currencies soon. Meanwhile, the US is enjoying its position as the top Bitcoin mining country across the globe.
China’s approach will surely be to create various cryptocurrencies that the government controls. Moving forward, they probably will hope to compete with the world by strategically increasing the value of the Chinese cryptocurrencies. However, we can only speculate at this point. We have to wait and see how the global crypto market evolves and China’s role post this Bitcoin mining ban.
Bitcoin is the most popular cryptocurrency and a pioneer in the space. It is solving many problems attributed to traditional forms of currency.
It is also the most valuable cryptocurrency in the world by far. The race for mining Bitcoin will continue as the world keeps moving towards transacting with digital currencies.