Bitcoin: 5 Facts You Must Know about China Mining Ban
Juan Villaverde is an econometrician and mathematician devoted to the analysis of cryptocurrencies since 2012. He leads the Weiss Ratings team of analysts and computer programmers who created Weiss cryptocurrency ratings.
In the world of crypto, news and rumors are rampant but facts are few. This is especially true about supposedly imminent government actions that can make or break investor fortunes.
Case in point: The news that’s been flying across the internet that the Chinese government is going to ban Bitcoin mining.
Here are the Five Facts You Need to Know
Fact #1. Not a done deal.
Some widely followed bloggers give readers the impression that the ban is a sure thing. Truth be told, it’s strictly a proposal under review.
Fact #2. Not unexpected.
Chinese miners have seen the handwriting on the wall ever since Beijing imposed a trading ban in the second half of 2017.
Even back then, many miners in China figured they could be next in the government’s crosshairs. So, any large China-based mining company should have contingency plans in place to move their operations to friendlier jurisdictions.
Fact #3. The Bitcoin protocol doesn’t care.
Nowhere within the Bitcoin protocol does it stipulate that Chinese miners must have a presence in mining BTC.
Nor is the network reliant on any single entity securing the network via Proof of Work.
Quite to the contrary, Bitcoin was conceived as an open-ended system where anyone with the resources to act as a validator can do so.
Thus, even if Chinese miners must shut down, they’ll be promptly replaced by others. Moreover, the reduced competition will make mining Bitcoin more profitable for those who remain in the game.
Fact #4. Potentially good for decentralization.
A common gripe about Bitcoin is that a small number of miners in China control most of the world’s hashrate (the mining “resource”), something that could threaten the decentralization BTC is known for.
If others have a better chance to compete with the mining giants in China, that could help enhance Bitcoin’s decentralization.
Fact #5. Peanuts compared to the bear market of 2018.
Veteran miners have become inured to shocks, the largest of which was the 85% decline in Bitcoin prices. A ban on mining by Beijing would be small by comparison.
Moreover, as we explain in our 23-page report that has been so widely acclaimed in recent days, we now have...
A Unique Combination of 3 Trends that Signal a Major Turn in the Crypto Market Overall
First, leading cryptocurrencies have enjoyed a major improvement in adoption, especially in terms of their on-chain transactions. On average, their transaction volume has more than tripled in the last year or so.
Second, these improvements have been driven by transformational upgrades in industry’s dominant technologies, especially the shift from Proof of Work to Proof of Stake. Granted, these upgrades come with trade-offs. But overall the industry is evolving rapidly.
And third, as we revealed these trends in our report, few people were aware of these positive trends, and most investors are still in the dark. So although crypto prices have rallied this month, they are still extremely low overall.
The combination gives investors the best of both worlds — vastly improved fundamentals PLUS an extremely low cost of entry at the same time.