In the month of June 2021 reading the newspaper and sipping your morning tea you must have come across the bold headline about China’s crackdown on Mining Hubs. Now, what does that mean, why is it happening and what will be the consequences of such a step?
Don’t you worry! All of this will be addressed in today’s program.
Hello and Welcome, You have tuned in to DueclixVoice. FM and I am your host Monazza Aarfa and today we’ll discuss about China’s crypto crackdown and its impact on the cryptocurrency market.
We have invited Rasheem James Northington as the host for today's program, and he will enlighten us on the subject and will share his opinion with us on behalf of the InfoTaxSquare.com which register companies across the United States regardless of your residency status in the United States and additionally, InfoTaxSquare.com is an active investor of different cryptocurrencies.
While the price of bitcoin was stabilized as a result of El Salvador's historic adoption measure, China, one of the world's largest Bitcoin mining countries, has intensified its cryptocurrency crackdown.
You all must be aware that mining is the process of creating new coins as well as keeping track of all transactions involving existing digital tokens. The Rising superpower China has always been known for its mining business because of its established technology supply chains and extremely cheap electricity. China accounted for 65% to 75% of the world's bitcoin mining, with the majority of it takes place in four Chinese provinces: Xinjiang, Inner Mongolia, Sichuan and Yunnan.
However, The country known for its mining production has intensified its crackdown on mining. Now, to discuss the reason behind this step and the implications it may cause we have invited Rasheem James Northington.
Hello, Mr. Rasheem How are you? Before we start today's program why don’t you tell us something about the organization that you are a part of ?
Yes, I am good! And I am glad to be a part of today’s program. InfoTaxSquare is a well established U.S based company which helps the clients with business registration and license permits. We strive to provide the best services to our customers. And, we also invest in different cryptocurrencies and in near future we may accept cryptocurrencies from our clients to use our services and that is why we always keep eyes on crypto currency world to create our company's policy accordingly. And, from the year, we will record cryptocurrency profile in our balance sheet as well.
Frequently Asked Questions
What exactly has been going to China about cracking down cryptocurrency mining industry?
What is the reason behind that China has clamp downed the cryptocurrency mining and what is behind the regulatory scrutiny?
You stated that the change of seasons causes miners to rely on coal for electricity generation. So, Why do not they switch to alternative energy sources like solar, wind and tidal power? Can we switch to other sustainable energy sources ? +
It is because solar and wind farms do not produce a consistent enough supply to power mining operations around the clock, As a result miners frequently resort to the most cost effective alternative which is coal.
Mining bans implemented by the Chinese government has caused a sense of fear and concern among the cryptocurrency users. Isn’t it ? Why are people all around the world so worried? What has happened due to the regulations ?
We have an idea now that miners are looking to relocate to different areas. So, can we say that a ‘miners migration’ is taking place? Is miners migration happening? +
Yes, definitely we can say that because it is happening. Miners are being enticed to migrate to the world's cheapest power sources as a result of China's crackdown, and they are scrambling to relocate their operations to other countries.
Bitcoin mining operations have gradually shifted to countries with year-round cool temperatures and consistent renewable energy supplies, such as Canada and Iceland. Kazakhstan, China's next-door neighbor, is another destination on miner’s map because the country's coal mines provide a cheap and plentiful source of energy. It also has a more relaxed attitude toward construction, which is advantageous for miners who need to build physical installations in a short period of time. Many machines have already been transferred to Kazakhstan.
Texas is another location on the list of miners because it not only has the cheapest electricity in the US, but also some of the cheapest in the world.
Is the ban truly harmful, and will it affect the miners in the long run? Will Crackdown affect severely? +
The mining ban in China may not be as severe instantly, as it appears because according to the reliable sources, Bitcoin is NOT prohibited in China completely. It is important to note that there has been no outright prohibition on the possession of bitcoin and other cryptocurrencies as Chinese citizens are not being forced to hand over their assets to the government.
A high concentration of mining activity in a single country hinders the entire system that supports cryptocurrencies. Vulnerabilities arise when so much mining capacity concentrates at one location. With miners forced to relocate, the redistribution should help to alleviate previous concerns about China’s mining dominance.Furthermore, mining, as we all know, consumes a massive amount of power, and mining rigs generate a tremendous amount of heat and must be cooled by fans, which consumes even more energy. As a result, more emphasis will be placed on technological advancements, such as the development of liquid cooling for computers, which can help reduce power consumption.
Listeners, One of the most important components of cryptocurrency mining is the power supply. It has an effect on demand and supply, as well as the inflation or deflation of cryptocurrencies. It is the supply of power that contributes to the transformation of the entire global financial system.
If a country wants to move up the ladder and switch from conventional to digital currency, they must first scale its current means of determining whether it has enough power supply to change its financial system from conventional to digital.
Also, one should never be afraid of market collapses as it is a part and parcel of life. You should strive to become an intelligent investor by avoiding death crosses and not becoming the market’s ‘Next fool’ by panicking when the crisis arrives at your doorstep.