Is Bitcoin’s China Crisis Over Already?

The Bitcoin hash rate (the amount of computing power being contributed to the Bitcoin network through mining) has since the beginning of July stabilized after it fell for 10 straight days. The move down started as the Chinese Central bank reiterated its warning over cryptocurrencies and may now signal that all of China’s mining crackdown might be over.

It also means that as China cracks down on miners, mining is reconstituting itself internationally and Bitcoin will become truly decentralized (and international).

70% of the hash rate in China

China had long been the major contributor to bitcoin mining, sometimes accounting for over 70% of the global hash rate. Critics of Bitcoin, such as New York university professor Nouriel Roubini, used to claim that because of this, China could always set the Bitcoin price.

But since the Chinese government decided to shut down a number of the world’s largest mining farms, finding alternatives has been helpful to make the world’s largest cryptocurrency truly decentralized. Some miners are already relocating to Russia, the United States (with a lot of attention for Texas) or India and others plan to do so, but for the moment nothing is sure as to where the mining equipment no longer used in the Middle Kingdom will end up.

In the short term, the cost floor is lowered for #bitcoin. I am still bullish long term but be prepared for short term shocks. #hashrate #trading pic.twitter.com/nD1QQ6s0Bb

— Aaron Ting | Octopus Network (@AaronTing8) June 28, 2021

Sam Doctor, chief strategy officer at BitOoda explained:

We believe there isn’t much active hash rate left in China. What is left is probably not mining openly, and may continue until either they get shut down or they can get equipment out of China and find an alternative place to move them.

If indeed China’s crackdown is finished, does that mean we can be looking up again? Or is it just, as the band China Crisis sang back in the 80s, wishful thinking?

aa-w / Depositphotos.com