Cryptocurrency mining in China may be subject to stricter oversight in the future. Beijing is researching cryptocurrency mining to assess its impact on energy consumption, Reuters reported. The Beijing Municipal Bureau of Economics and Information Technology sent out an emergency notification to the city’s data centers on Tuesday asking them to report any involvement in cryptocurrency mining operations. The notice says data centers must report the amount and percentage of energy used to mine Bitcoin and other cryptocurrencies.
The country believes that the mining of cryptocurrency violates the current legislation, pollutes the environment and slows down the development of the economy. Also, the authorities are worried about its growing carbon emissions.
This has caused some panic in China, as miners fear a ban on mining in the country. And this can seriously affect the industry. This will lead to a decrease in the complexity of mining during the period of shutdown of the main mining farms, as well as increased volatility of the most popular cryptocurrencies.
For example, recently, after a series of accidents at coal mines in southern China caused by power outages, the global Bitcoin hash rate plummeted.
However, Chinese columnist Colin Wu was quick to reassure the crypto community. Noting that the Chinese government is only investigating to get a clearer picture of energy consumption in mining in Beijing. Therefore, with a high degree of probability, there will be no ban on mining, and if there is, it will affect some specific areas of China, where this activity interferes with the main production.
How does China affect Bitcoin?
China is the largest mining market. Now 90% of the equipment remains in this country. The Chinese are actively buying used video cards. There are many private hydroelectric power plants in Sichuan Province, and it is now their season for them to operate.
If, nevertheless, there is a complete ban on mining in China, this will greatly reduce the complexity of the network. It will become easier to mine cryptocurrencies, but after that the rate will definitely go down.
It should be noted that when the price of the first cryptocurrency rises or falls, this inevitably affects the value of the vast majority of altcoins and market capitalization. That is why many members of the crypto community have concerns that the decision of the Chinese authorities will negatively affect not only the performance of the Bitcoin network, but also the dynamics of the market recovery.
China – mining superpower
Despite the ever-increasing risks, China still has the bulk of its mining capacity. According to Quartz, more than two-thirds of the world’s Bitcoin mining capacity is concentrated in the PRC. Approximately the same share of the mined coins goes to them on average.
However, in China everything isn’t so simple, because you never know in advance what to expect from the country’s leadership. In their opinion, the mining of cryptocurrencies is an unsafe production. Associated with an excessive expenditure of resources and has a harmful effect on the environment.
Many Chinese companies have long been thinking about launching capacities in other more mining-loyal jurisdictions. This list includes the USA, Iceland, Norway, Russia and some other countries.
According to experts, legislative changes may change the scale of mining, but will not be able to eradicate it altogether. They also stressed that Bitcoin certainly will not crash. Thus, many experts are confident that nothing threatens Bitcoin and the market as a whole in the medium and long term.