Crypto Mining Ban: Bitcoin Miners Settle In their New Homes After China Clampdown

BTC miners are now finally settling down in their new countries after the mass exodus from China. In May, China intensified its position on mining clampdown, and it was almost as if BTC would plummet to its lowest lows predating 2010. The industry was shaken by the news terribly, due to the fact a substantial amount of mining activities took place in the Asian country. 

Chinese authorities banned crypto purchases, crypto investments, and all forms of trading and exchange. The Central Bank held meetings with other banks and financial institutions, and they were ordered to stop speculating about trading BTC. This downed the remaining hopes investors in the region and the entire world had about China moving into the crypto world. 

The news on the clampdown affected the BTC hash rate, as it witnessed one of the largest declines since the emergence of the popular cryptocurrency. Additionally, China’s BTC mining declined by almost 40% since May, as many miners turned off their pieces of equipment. This was followed by the closure of China’s secondary market, where miners sold GPU mining cards. The ban resulted in many large pools, such as Huobi migrating to other countries with flexible mining laws.

Why China Banned Cryptocurrency Mining

China has had a negative perception of Bitcoin right from the start. The country has frequently warned its citizens against dealing in crypto assets because they weren’t backed and could affect the economy. In addition, the country stated that no one truly understands how crypto works. However, those weren’t the reasons for the ban. At least, not the main one.

China stated that the reason for the ban on mining pools was its high electricity consumption. As you know, China is home to a significant share of mining activities. These mining activities rely on coal power, which releases lots of pollution. 

Although the reason makes a lot of sense, some critics and experts revealed that the main reason for the ban on mining was not to preserve the country’s ecosystem but to promote its digitized fiat currency, the digital yuan. By banning crypto-related activities, the government will pave for its CBDC to own the space. Currently, the CBDC is fully developed, and passengers can now make ticket purchases with the digital yuan. In late August, China became the first nation to allow its clients to exchange CBDC to cash. 

New Homes for Runaway Miners

Since the start of the year, China’s share of BTC mining activities has continually reduced, but the intensified clampdown in June further reduced it. It made the Asian nation less attractive for crypto investors. The country’s share of the BTC mining pool still stands at 46%, which is still high, but that share will likely reduce soon.

The United States leads as the most attractive spot for mining operations due to its cheap renewable energy sources and affordable electricity. Kazakhstan follows next, with the share of mining activities jumping from 1.4% – 8.6%. Electricity is inexpensive in this country, which suggests why miners are also moving there.

Russia’s BTC operations have also increased significantly after the Chinese ban. The temperate climate will help reduce cooling costs and increase mining profits. It’s expected that more miners will move out of China before the year ends. 

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