Some mining companies have begun to halt operations in China due to calls from local authorities to tighten regulation of the mining and trading of cryptocurrencies. Huobi crypto exchange has temporarily suspended services to customers from mainland China.
Fear of uncertainty
Until now, the mining industry has been less regulated compared to other cryptocurrency sectors. However, in recent years, the size of the industry has grown significantly, forcing regulators to take more and more attention.
Since more than half of the world’s mining capacity is concentrated in China, the growing attention of the regulator is not unexpected.
Most likely, miners aren’t afraid of regulation itself, but of uncertainty. Since often market players don’t know what to expect from the regulator. The wary attitude of the Chinese authorities towards this industry makes the move to more predictable jurisdictions of miners.
Migration of miners from China has already begun
Miners began to relocate to other countries even after it became known about the probable ban on the mining of cryptocurrencies in the Chinese province of Inner Mongolia.
Mining companies have hundreds of millions of dollars at stake. So it would be too rash to take risks and hope that this will not affect their work. Experts believe that the migration of miners from China will continue further.
It is quite logical that miners are looking for new locations. Especially since many countries offer favorable conditions for placing data centers on their territory.
There has been a steady downward trend in China’s share for several years now, and this movement will continue, experts say. There are more and more institutional investors on the market who accustomed to working in traditional institutional capital jurisdictions, such as the United States, where the volume of inexpensive “green” energy from renewable sources is constantly increasing, and the rules of the game perceived by investors as more predictable.
News from China: implications for hash rate
As a result of the migration of mining companies from China, the overall hash rate of the Bitcoin network is gradually sinking.
This week, the share of Chinese mining pools in the Bitcoin hash rate has significantly decreased. According to updated data from BTC.com, the largest miners from the Middle Kingdom have lost up to 30% of the capacity generated in the bitcoin network.
Pools AntPool, F2Pool, Poolin and BTC.com suffered the most losses.
BTC hashrate has also dropped sharply this week. In just a day, the computing activity on the network collapsed by 25%.
Now, according to BitinfoCharts, the hash rate is in the region of 140 exaches per second (EH / s). Note that in mid-May this figure exceeded 171 EH / s.
The decline in computing power began last month. It caused by the repressive policies of the Chinese authorities. Several provinces in the PRC first reduced the supply of electricity to mining farms, and then completely suspended their supply.
This week, officials from Xinjiang province ordered local miners to stop working.
According to experts, if Beijing’s repressive policy against miners continues, then China will soon lose its status as a leader in Bitcoin hash rate.
However, on the other hand, it will even serve to the benefit of decentralizing the Bitcoin network. Mining centers will be more distributed across different regions and will not be concentrated in China.