China Wants to Destroy BTC: How Will the Mining Ban Affect the Crypto Market?
China has declared war on miners! This news has turned the whole crypto industry upside down. We have already touched on this topic in the previous article, however, we did not get into it. It might be useful to talk about this in greater detail. Today we will try to figure out the reasons for the Chinese ban and look to the future. Let's get started!
Why Did the Middle Kingdom Ban Mining?
It's a question that has intrigued everyone. The most obvious theory is the lack of environmental friendliness. China, as you know, ranks first in the world in terms of digital gold production. Given cheap power and proximity to equipment suppliers, the country has 75% of all BTC production capacity. Since the process involves high consumption of electricity for computing, ventilation, and cooling systems, mining releases carbon dioxide gas into the atmosphere.
Concern for the environment is a lovely motive for fighting against virtual currency, however, it is by far not the only one. The decentralized super-organism got some serious competition - the digital yuan. PRC started to create its own cryptocurrency in part to gain total control over the finances of its residents. Because of the digital payment system, authorities will be able to monitor the transactions carried out within the state. Since crypto rules out the need for banks (discover more here), it has every chance to stop China from reaching its target. That is why the government has been taking a dislike to BTC year after year.
Due to the Chinese repression, Bitcoin has suspended its moonshot and fell below $35,000. Altcoins had a tough time as well. The price of ETH reached $2,000 on June 21. The closing down of major BTC mining centers had a negative impact on the global hashing speed. The hashrate fell to the lowest values since the end of last year.
Against the backdrop of negative developments in China, some miners were forced to seek new places to re-establish the activities, others - equipment buyers. Mining pools began moving into other areas, and the prices of video cards began to plummet. The same is true for the demand for them. Well, that was unpleasant.
Conclusions and Outlook for the Future
How's that story going to play? Is the global crypto crisis really coming? Of course, it is impossible to predict the future, but let us now try and seek the help of specialists.
Now, at first glance, the situation looks worrisome. The JPMorgan analysts have presented a negative outlook. They think Bitcoin will easily collapse to $15,000 or $10.000. Nevertheless, a majority of experts remain positive and optimistic on this matter.
To illustrate an entirely different point, they are sure the current prohibition will only delay a new round of BTC growth. Michael Novogratz has no cause for undue concern. The head of Galaxy Digital is convinced that the high-yielding alternative asset class will rise from the ashes. The PlanB analysts believe that the BTC price will reach $135,000 in December. The CEO of Celsius Network went even further with his prediction. According to Alex Mashinsky, the king of crypto will reach the $160,000 mark in 2021. We need to hope that the most optimistic scenarios will come true unless unforeseen circumstances arise.
Word of advice, never be seized by panic. Remember that "the time to buy is when there's blood in the streets”. Even if the blood is your own. Good luck!