As the prohibition on Cryptocurrencies in China approaches its final implementation date of September 2021, Bitcoin has been experiencing increasing difficulty. The majority of Bitcoin's hash power, which was situated in China, has moved out of the country since that day, reducing Bitcoin's mining capacity by minimum 75%. As a result, a massive exodus of Chinese mine workers is underway, dubbed the "Great Mining Migration." The Chinese mining industry is expanding westward, mirroring the late antique travels.

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The Bitcoin market has been rocked by China's massive attack. Given China's prominence in the new financial ecosystem, Beijing's moves may signal the beginning of a global crackdown on Cryptocurrencies and Crypto assets by governments. To say the least, it's a bad turn of events. Bitcoin and other Cryptos have quite a lot of problems, however the technologies they're built on have a lot of potentials. Initial coin offers (ICOs), the Crypto counterpart of a company's initial public sale of shares, were formerly outlawed in China. The Chinese government responded by taking measures to restrict Crypto-related activity by the country's financial institutions. This current action covers a lot more ground. Trading Cryptocurrencies inside the country has become illegal. In theory, deals like this may be made behind the back of the government. Nonetheless, few Chinese people or financial organizations are willing to jeopardize the fury of the authorities. The moves by Beijing show how central banks and governments across the world are becoming more and more concerned about the potential for Cryptocurrencies to destabilize their financial systems as well as have other undesirable effects. Concerns are warranted on their part.

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China’s Cryptocurrency Ban

In China, efforts have been ongoing to outlaw virtual currencies. Since 2009, when it announced its first general ban on Cryptocurrencies, the Chinese government has enacted a succession of progressively draconian legislative bans, including its first Bitcoin-specific ban in 2013. Therefore, despite their intention of restricting Cryptocurrencies, they only focused on a subset of the phenomenon. China has finally succeeded in permanently banning Cryptocurrency use. However, the Crypto business in China has been thriving in the meanwhile. From Bitcoin's inception, many Crypto miners have flocked to China for its low electricity costs and relatively low cost gear. At one time, Crypto mining activities in China required industrial-scale infrastructure. At the moment Chinese miners began turning off their equipment, at least 65% of Bitcoin's hashrate was located in China. China's central bank and 10 other government agencies made a joint statement on September 24, 2021, pledging to eliminate all "illegal" Crypto activity. Cryptocurrency mining was practically outlawed by the declaration, prompting a huge proportion of Chinese miners to leave the country.

Bitcoin, the first Crypto, has shifted from supporting illegal activity on the darknet to facilitating extortion payouts. Furthermore, this has become clear that Bitcoin does not really cut it as a means of ordinary trade. Bitcoin 's value fluctuates wildly, as well as the Cryptocurrency's system isn't equipped to handle a high throughput of transactions efficiently or affordably. Rather, Bitcoin has evolved into a virtual financial instrument that is only traded on speculation markets and has no real value. As a result of its limited supply, it commands a premium price. Bitcoin's maximum supply is capped by the computer mechanism that controls the currency's production, unlike monetary systems which central banks may create as much of whenever they want.

Why is China Banning Bitcoin?

The ban on Bitcoin in China was overdue. Cryptocurrency marketplaces are free and uncontrolled, which is in direct opposition to the Chinese administration's goal of creating a planned society. China tried to prohibit Cryptocurrency over a dozen times before finally succeeding in 2017. The Chinese authorities now have to worry about a secondary issue, the need to reduce CO2 emissions, in addition to its primary ideological concerns surrounding the market. China declared in September 2020 that it will slow the rate of increase in carbon dioxide emissions over the following decade and achieve carbon neutrality by 2060. It is understandable that the Chinese government would take such a stance, since Crypto mining requires a lot of power and the administration there believes the business isn't good for the economic system.

The Great Mining Migration

Since the Cryptocurrency prohibition in China has gone into effect, Cryptocurrency miners in China have been ordered to cease their activities or risk criminal penalties. As a result, many Chinese miners are leaving their jobs, however others have decided to relocate to underground, off-grid energy supplies. Several Chinese Cryptocurrency miners have relocated to the West and are setting up shop there. At least 75% of the Bitcoin network's hash power has been lost since the restriction went into place, which implies that the Crypto industry, as well as Bitcoin in general, is undergoing the most significant demographic upheaval in its past.

What Does China’s Crypto Ban Mean for Bitcoin?

The Chinese authorities have now succeeded in outlawing all Cryptocurrencies after years of trying. To put it another way, any currency outside the Digital renminbi, which is supported by the Chinese government. After being told to stop working, Chinese miners fled the nation in search of a new home. This is safe to say that China's action has just brought about the most dramatic shift in Bitcoin's user base, combined with a healthy dose of concern. Still, this has the potential to have a happy ending. As its users go westward, Bitcoin will reach the more open marketplaces of the West and, with any luck, would find a more level playing field there.

Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.