China to ban Bitcoin mining, but that is actually very good news!

in bitcoin •  last month  (edited)

In a news report this morning, it was revealed that China may be moving to ban all bitcoin mining.

On first glance that might sound like terrible news...

After all, a lot of bitcoin mining takes place in China.

In fact, some people like to claim that China owns roughly 30% of the entire bitcoin mining market:

(Source: https://www.ccn.com/chinas-bitcoin-mining-ban-plan-good)

Though, that is not entirely accurate for reasons I won't get into here.

So, why is this good news?

If China goes through with this ban it would be very good for several reasons.

For one, getting rid of the Chinese miners would finally make bitcoin more decentralized, especially in the short term.

That has long been a criticism of bitcoin, that is is decentralized in name only, but not in reality.

Secondly, it would raise the cost of mining globally.

Right now the Chinese miners have an advantage over much of the rest of the world when it comes to mining bitcoin due to cheap electricity.

That also means they are willing sellers at lower prices than the rest of the world.

If you remove the lowest cost producer, it likely removes some of the selling.

The break-even cost of mining goes up globally and the price of bitcoin likely goes up as well.

Which means...

While the mainstream media tries to spin China banning bitcoin mining as a terrible blow to the industry...

My theory is that if China actually goes through with this, the price of bitcoin goes up, possibly significantly.

It becomes more decentralized and the global cost of mining goes up.

Two things most bitcoin investors would like to see.

The news report can be seen here:

https://www.reuters.com/article/us-china-cryptocurrency/china-wants-to-ban-bitcoin-mining-idUSKCN1RL0C4

Stay informed my friends.

-Doc

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agree

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Hopefully they actually do it.

Whoop Whoop 👍

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Hopefully they actually do it!

I find it amazing when we hear about China this or China that or India this or India that or the US this or the US that and there is no associated price action.

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It is nice that we have come that far eh? Regarding China I think it has to do with the fact that China plays such a small role regarding bitcoin's price these days. China used to be something like 80% of the crypto market a few years back, now they are less than 10%. Once the miners are no longer able to exploit the cheap electricity rates there, China will literally be a non factor. I just hope they actually follow through with this news so we can watch the price of bitcoin climb on the backs of it. :)

Thank you for this valuable article. At first I thought that this news was terrible. After your assessment I changed my idea.

Posted using Partiko Android

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Glad it could help.

I like the picture cause it shows the actual companies that are mining bitcoin.
We will see how it will affect the global mining biz.
Keep on postin

Posted using Partiko iOS

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Hopefully they actually do it and it brings the global cost to mine up.

It is the last thing they have to ban after ICOs, crypto, and now mining.

Posted using Partiko Android

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Down the list they go!

It could lead to a new phase of energy efficient seeking pools to replace the mining power which is also beneficial to the fundamentals. With the halvening less than 2 years away, it would be a great factor to see a more decentralized network!

Posted using Partiko iOS

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Yep. I just hope this isn't the beginning of the end for POW.

We see soon what happen. 😀👌

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I hope they follow through with it.

Wondering when the market will any impact?

Posted using Partiko iOS

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Not sure. My guess would be when it actually happens.

This is interesting news indeed. Who will be the worlds next... MINING Champion?!??!!

Posted using Partiko Android

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Probably Iceland or Greenland or some other country with very cheap electricity.

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I think Bitcoin mining is such a big market opportunity that they could actually use the generated heat to run turbines that generate electricity, basically self-sustaining hydroelectric plant. The circulating water can be cooled down using heat exchangers already used for example in some Nordic countries. Good thing in hydroelectric plant is that you can combine it with solar panels to increase power output. Everybody loves environment friendly electricity, right...

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You could set this up?