What Does China's Cryptocurrency Mining Ban Mean for The Bitcoin Mining Industry?

China’s plans to restrict cryptocurrency mining have sparked internet-wide discussion on what this could mean for bitcoin miners around the world. Though the country is unlikely to outright ban cryptocurrency mining anytime soon, they are currently implementing regulations to keep it in check. Recently, China has announced their intentions to regulate mining and attempt to dissuade miners from operating in the country.
The company’s decision to crack down on bitcoin mining operations is partly due to energy usage concerns. Bitcoin miners use specialized hardware to solve mathematical puzzles, racing against other miners, in order to add bitcoin transactions to the blockchain. This process results in the release of new bitcoins as an incentive for the miner.
Clearly, the operations involved use a huge amount of energy. In fact, China is responsible for using about two-thirds of the energy that goes towards bitcoin mining around the world. Bitcoin miners are attracted to China because of their cheap electricity prices. However, China plans to use this to their advantage by increasing electricity prices for bitcoin miners as an attempt to push them out.
But, energy usage isn’t the only reason that China is trying to regulate cryptocurrency mining. They’re also looking to avoid the financial risks that come with cryptocurrency. For example, the country has cracked down on numerous criminal cases of people using alternative cryptocurrencies to raise illicit funds.
Since China is responsible for about 70% of the bitcoin mining industry, a reduction on mining in the country will have world-wide effects. First of all, many Chinese cryptocurrency miners are moving their operations to the U.S. and Canada. Bitmain, a Chinese company involved in bitcoin mining, is building their headquarters in Singapore and now has mining operations in both the U.S. and Canada. Chinese bitcoin mining companies moving to other countries will likely see lower profit margins as a result of the higher electricity prices in other areas.
While Chinese bitcoin miners make the lengthy move, mining companies in other parts of the world will advantage from the decrease in miners on the network. When there are less miners to compete with, solving the blockchain puzzles and mining bitcoin becomes easier. China’s ban and the resulting decrease in bitcoin mining in the country will make it easier for bitcoin minors in other areas to operate. As a result, many American companies who are making the move towards a focus on blockchain may have an advantage. Such as the former Long Island Iced Tea Corp., now named Long Blockchain Corp., that just bought 1,000 mining units from Bitmain.
Because China was one of the world’s biggest markets for bitcoin, the government crackdown on trading and mining has lost the country tens of millions in revenue. Other countries may be in a position to capitalize off bitcoin mining as they take over the mining network from China.
Update: Long Blockchain Corp. has canceled its plans to purchase the bitcoin mining units. The company intends to focus on its merger with Stater Blockchain Ltd.

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