China is one of the world’s most active countries in bitcoin mining. But this may change as the Chinese government looks to crack down on such actions. This could cause significant changes in how the mining industry acts while also influencing bitcoin values down the road.
Blockchain industry professional Elly Zhang posted a message on Twitter of a memo from the Chinese government issued on January 2. An online finance regulator recommended that bitcoin mining actions in the country be limited. This comes amid concerns over speculation of digital currencies.
The regulator, who is supported by the People’s Bank of China, has a great deal of access to many cryptocurrency-related functions. However, the Chinese government has been trying to control how such currencies are offered. This in turn is keeping miners from being able to produce currencies. It is also keeping China from having open access to trading functions.Advertisement
These moves come amid China’s serious consideration of producing its own cryptocurrency that would be controlled by the state government without any deregulated features involved in the currency.
A Productive Country
This action from the Chinese government could cause significant changes in how the bitcoin is mined. It is estimated that about three-quarters of all bitcoin mining actions in the world are based out of China.
Bitcoin mining has become a big deal in China thanks to how power can be found for cheap. There are also places around China where there is a greater capacity for energy.
Some mining teams in China have been heading out to other countries where bitcoin mining facilities are available. Iceland has become very popular for offering cheaper mining activities where energy is more affordable. Mining farms in Iceland have also been known to be very large and are available for larger clients to use. The United States and Canada have taken in a few Chinese mining teams too.
Declines in Values
This move could be seen as a key part of why many cryptocurrencies have fallen in value. The bitcoin experienced a decline of nearly five percent of its value to go down to around $15,000 following the release of this information. Other prominent currencies like Ripple, Cardano, Stellar and Litecoin also saw similar declines in their values. The currencies have been trading steady since the initial shock of the announcement.
How Will Mining Go Along?
Bitcoin mining functions will continue to move forward over time. However, bitcoin mining will be harder for people to complete as the processes needed for mining new coins will become more complicated. This comes as the number of available bitcoins on the market is declining.
There are currently around 16.8 million bitcoins having been mined out of the possible 21 million that can be produced. Therefore, the bitcoin could be harder to produce over time, thus requiring more energy. The crackdown on Chinese mining actions could make production of the bitcoin even harder to manage. It is unclear as to how well mining actions might impact the value of the bitcoin after a while.