Jiang Zhuoer, the operator of the major Chinese mining pool Lebit Mining, argued that the recent crackdown on crypto in the country would likely lead miners to relocate their activities to Europe and the United States, journalist Colin Wu pointed out.
“The worst case scenario could be that large mines shut down and China’s bitcoin mining [will return] back to the status of 2014-2015. Little miners have housed a few at home. Medium-sized miners can find a house that can house dozens of mining machines, while large miners can find a secluded small hydropower plant, ”Jiang said.
A Chinese man who ran an overseas mine told me that most Chinese miners thought building mines overseas was too expensive, almost ten times the price in China, but received many inquiries after last night.
– Wu Blockchain (@WuBlockchain) May 22, 2021
He also noted that building mining operations overseas was previously considered too expensive for local miners – as the cost could be ten times higher than in China – but many of them changed their minds, the government said earlier this week.
How CryptoSlate Chinese authorities reportedly released several “anti-crypto” announcements earlier this week that resulted in at least two major market slumps on May 19 and 21.
First, three industry associations under the Chinese central bank called for a ban through financial institutions and online payment channels that include cryptocurrency. Then the government also acted against bitcoin mining.
Mitigation of social risks
According to Jiang, one of the main goals of the new guidelines is to protect retail investors from the risks associated with crypto trading and mining.
“That is, individual mining is allowed and you can take profits and losses yourself, but financial capital is not allowed to intervene in mining, which brings social risks due to losses,” Jiang said.
In other words, China’s government wants to protect the public from losses that could result from investing in cryptocurrencies and mining. And while this is not – at least for the time being – a general ban for the industry, it can nonetheless result in a significant portion of Bitcoin mining capacity being relocated to other countries.
“Mining in China can change from large to family miners, and even if 50% of the mining machines fail, there is no problem for the bitcoin system. But the top mining pools can become European and American mining pools, ”Jiang concluded.
Taking crackdown on miners in China would radically reduce the carbon footprint of bitcoin mining, increase the profitability of all remaining #bitcoin miners, reduce the agonizing Chinese FUD, support progress towards our ESG goals, and increase the value of BTC. We should be so lucky … https://t.co/78ELDF9sku
– Michael Saylor (@michael_saylor) May 21, 2021
For his part, Michael Saylor, CEO of MicroStrategy, who had invested billions of dollars in Bitcoin in the past few months, argued that China’s approach to Bitcoin is indeed very good.
“Tackling miners in China would radically reduce the carbon footprint of bitcoin mining, increase the profitability of all remaining bitcoin miners, reduce the agonizing Chinese FUD, support progress towards our ESG goals and increase the value of BTC. We should be so lucky… ”he argued.
Judging by the abundance of huge red “candles” in crypto price charts, the market today no longer seems to agree with Saylor.
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