China tightens its grip on cryptocurrency mining, closing major mining stations across the country
Holding 65 % of all cryptocurrency mining resources makes china THE superpower in the world of decentralization. But this domination is about to come to an end soon. The country has been trying to curb bitcoin and various other cryptocurrency trading for a long time, and they seem to have finally reached a consensus. The Chinese government has issued mandates to major financial institutions across the country to stop accepting crypto. Bitcoin’s value dropped almost 100% following the news, currently trading at 34723 USD.
Where does china’s mining power originate?
The University of Cambridge reported that China accounts for 65 % of the hash rate (a metric to measure mining capabilities) of the entire world. The country has three primary provinces for bitcoin/altcoin mining, Xinjiang, Sichuan and Mei Mongol, out of which Xinjiang accounts for 35.76 %. And according to The Block, the government has ordered to shut down the mining hubs at Xinjiang, also directed officials in Sichuan to cut off power to any mining hub found within the area. These crackdowns had a ripple effect on bitcoins and other major cryptocurrencies, causing all-time low prices. Ethereum lost nearly half of its value, while other cryptos like Dogecoin, Shib have taken 30ish % hits.
What next for Chinese crypto miners?
Chinese mining equipment owners are either selling off their resources to foreign buyers or moving to the US. Given the mining power of china, a complete large scale ban on cryptocurrency trade, mining would have major ramifications. Mining plays a pivotal role in securing crypto transactions and if 65 % of all mining resources stop functioning, the volume of miners will drop drastically and that would lead to ultra-slow transactions. Sending bitcoin to your friends might take days. And there is also the risk of a 51% attack, a major security concern for bitcoin and other blockchain-driven coins.
Also read China’s stance on crypto