China is set to clarify its new policy for the Bitcoin mining sector in the coming weeks. For the first time, a high-ranking Chinese government official has spoken about a change in the status quo that rules this BTC mining.
Jiang Zhuoer, founder of BTC.TOP, one of the world’s largest crypto mining operations, shared some thoughts on the potential implications for the sector. Zhuoer believes the new measures are “not as serious” as the world thinks they are and added the following:
According to the minutes of “China Financial Stability Board”: We resolutely prevent and control financial risk…. we shall crack down #Bitcoin mining and crypto trading activities in order to prevent individual risks from being spread to the social level.
Therefore, Zhuoer stated that individual mining will continue existing for now and possibly in the future. The medium and industrial size operations could take the worst deal. As Bitcoinist reported earlier, China has environmental requirements to be met by 2060 and BTC mining seems to be perceived as a potential obstacle to complete that agenda.
The Worst-Case Scenario For The Bitcoin Mining Industry In China
The market and the crypto industry have their natural ways of reorganizing themselves. In this case, Zhuoer predicts that China and large operations could take the worst part of the deal with little to no consequences for the Bitcoin network.
The miner referred to 2017 when China undertook a crackdown against crypto exchanges. At that time, these platforms migrated out of the country. Large BTC mining operations could have the same fate, either they will reduce and become smaller to fit the regulations, sell their equipment for a profit, or move to a different location outside the country. Zhuoer stated:
(…) in addition, most of the cutting-edge machines will be shipped overseas, the machines’ price will remain in a reasonable price range. (…) But in the long run, if China takes regulatory actions against crypto mining, then major Chinese manufactures #bitmain will probably sell most of their machines abroad.
American and European mining operations will take the best part of the deal, as Zhuoer predicts an increase in their relevance. Thus, China’s influence on BTC mining and the global hashrate will be minimal. Zhuoer said:
In the end, Chinese hashpower will flow abroad just like the Exchanges did in 2017, China will play a less significant role in the global hashpower distribution.
Almost everyone familiar with China’s decision agrees that Bitcoin will benefit from a redistribution of its hashrate. Primitive Crypto founder Dovey Wan said that the Asian giant is trying to prevent two things: capital outflows and speculative behavior to maintain “social stability”. Wan added:
Bitcoin mining ban is a collateral damage in the suite of actions to “maintain financial and economic stability” (…). But unironically good for a global hashrate redistribution
At the time of writing, some miners are already taking steps to migrate out of China. Therefore, it’s possible that BTC’s hashrate could decline, as miners set up their overseas operations.
BTCM, a Chinese company listed on the Nasdaq, announced an investment of 9.33m to build a mine in Kazakhstan with 100 MW. It also cooperates with another Kazakhstan mine to host the mining machine, which is 60 MW. At present, Chinese miners are seeking overseas mines.
— Wu Blockchain (@WuBlockchain) May 24, 2021
At the time of writing, BTC trades at $37,678 with an 11.5% profit in the daily chart. The cryptocurrency broke out of the $38,000 range but faced an increase in selling pressure. If Bitcoin wants to reclaim the important $40,000 price mark, it must hold current levels and make another push for a higher low.