Chinese Bitcoin Miners Moving Operations due to Crypto Crackdown
Following a rapid rise in the Bitcoin value, China has been one of the countries leading the way for a new round of cryptocurrency crackdowns, increasing pressure on Bitcoin miners and also other providers facilitating access to decentralized digital assets.
The country had already launched a pilot project called Digital Yuan, testing consumer behaviour with regards to using digital money. In such conditions, cryptocurrencies like Bitcoin are perceived as a threat to bypass the government when it comes to fiscal and privacy on the web.
China bans mining operations
At some point, China accounted for approximately 65% of the Bitcoin hash rate, suggesting many miners were operating in the country. Low costs for energy as well as labour had been the main incentives, leading to an exponential growth in the crypto activity, both on the mining and trading front.
Things have changed drastically since 2017 when China started to ban crypto-related operations and the pressure escalated once again in 2021, given regional authorities clamp down on miners operating across the country.
Although the market seemed to be accustomed to the idea of a Chinese regime not favouring cryptos like Bitcoin, increased regulatory pressure is a drag on valuations, pushing BTC from over $64,000 to now around $32,000. Losses of 50% from the highs are keeping the sentiment subdued and also, miners have been moving outside of the country, searching for more favourable conditions.
Miners moving to other countries
Following the May announcements suggesting Bitcoin miners will be facing pressure from the government, companies like Bitmain, Blockcap, Argo Blockchain, and Riot Blockchain had started to move operations. US, Russia, Kazakhstan, Malaysia, and Iran are countries with a significant contribution to the Bitcoin hash rate, and thus are now an optimal destination for miners wanting to avoid any penalties.
Some negative bias towards crypto can be spotted in the Western World, as well, but for the time being, the situation does not resemble what’s happening in China.
How can people protect themselves in a crypto bear market?
The crackdown on crypto miners had implications for investors and traders involved in Bitcoin. During times of market uncertainty, they need to use exchange platforms such as Coinjump, which are offering safe, easy, and secure transactions.
With Coinjump, customers have the ability to buy or sell Bitcoin, benefiting from attractive market rates, a variety of payments, a swift OTC desk, and a web-based friendly platform that is suited for a broad audience.
Registered exchanges like Coinjump provide a safety net during times of uncertainty, given users can either reduce their exposure by selling Bitcoin or buy when the market sentiment improves and valuations pick up again. For now, BTC is holding well above the key $30,000 support area, but nobody knows what the future might bring.
China’s cracking down on crypto miners might be already priced in, but other factors might continue to weigh on valuations until a new bullish move up starts to build.