China and its Long-Term Battle Against Bitcoin
Last week, China dealt a second blow to bitcoin, as the country’s government announced a crackdown on bitcoin and trading activities. This month, authorities also took measures against the cryptocurrency industry as a whole. They decided to ban financial institutions from offering any form of cryptocurrency service.
Bitcoin mining was not mentioned, but the government’s actions show that China is monitoring the situation. China accounts for 65% of bitcoin mining, followed by the U.S. and Russia, with 7% each.
The country plans to be carbon neutral by 2060, and reach its peak CO2 emissions before 2030. That’s why China announced guidelines in 2019 to reduce the activity of bitcoin miners. Last week’s statements represent a continuation of existing policy decisions.
Within the country, the Inner Mongolia region represents about 8% of China’s mining efforts. Local authorities gave cryptocurrency miners two months to shut down their operations, citing heavy pollution and environmental concerns. Several days ago, the Inner Mongolia Development and Reform Commission made an interesting announcement. It announced a hotline for people to report illegal cryptocurrency mining farms.
Last week’s announcements are not new, the country made several moves in recent years to restrict cryptocurrency exchanges. They reflect an even stricter position. Some analysts believe this is because China aims to launch its own centralized digital yuan, which is currently in a pilot phase.
In terms of mining, unlike gold or coal–halving the number of mines wouldn’t half the production of bitcoin. If a large proportion of miners shut down, the puzzle would become easier to solve. So, we’d still get a new block every 10 minutes, but that’s unlikely to happen.
Most likely, some mining will continue in the country, but some operations will move abroad. The U.S. may benefit, along with countries like Canada, and Georgia.
Huobi, China, and bitcoin
The cryptocurrency exchange Huobi decided to cut or suspend some of its services and products in certain countries. Huobi also stopped its miner hosting services in mainland China due to the recent crackdown. The Cryptocurrency exchange didn’t disclose the specific countries and regions where it will stop trading services and investment products.
Huobi is also set to suspend the sale of cryptocurrency mining machines as well as mining hosting services in mainland China.
Huobi is a main cryptocurrency trading services provider for Chinese cryptocurrency investors. It has the eighth largest mining pool in the world with a 4% hashrate of the entire bitcoin network.
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