DeFi
China Shows Interest in Restoring Bitcoin Mining in the Country
China was once one of the most opposed countries to Bitcoin (BTC) mining and ownership. So much so that it banned local mining and the use of any cryptocurrency on its territory. It is now showing interest in changing this stance, which will involve reversing the policies implemented years ago to join the blockchain-based economy.
This growing interest in decentralized finance (DeFi) is driven by the increasing pressure the government is facing from its local investors. It is in everyone’s interest for the country to keep up with the evolution of technologies with high economic impact like Bitcoin.
When and why was Bitcoin mining banned in the first place?
The Chinese government showed its disinterest in cryptocurrencies as early as 2017 by banning initial coin offerings (ICOs) and exchanges in the country. Its hammer blow fell on Bitcoin mining much later in 2021 when it declared all cryptocurrency businesses illegal. This includes crypto casino gamestrading and lending using virtual tokens.
There are two arguments that motivate China’s position on cryptocurrencies. The first is how digital assets, as a means of payment, disrupt the economic and financial order, as they can be a breeding ground for crime. This is money laundering and terrorist financing, which the whole world is trying to combat.
The main reason is the high carbon footprint of mining, as most of the country’s energy comes from fossil fuels such as coal. Carbon emissions per Bitcoin mine can then reach up to 8,000 to 13,000 kg, which is estimated at 24,000 to 40,000 kg per hour in Inner Mongolia. The mining ban came into effect in June 2021 to combat the practice.
What happened next after China banned Bitcoin mining?
The most obvious effect of the cryptocurrency exodus from China on Bitcoin was a sharp 50% drop in the network’s computing power. This leveled off at 80% a little later, until mining activities in the United States strengthened to compensate for their absence. Bitcoin also experienced strong market growth, reaching a new all-time high in October 2021, which was not surpassed until 2024.
These major developments in the Bitcoin market happened without China’s involvement. Thus, their local investors were unable to capitalize on the DeFi economy. Many Chinese miners fled to the US to continue their operations, leading to a sharp increase in carbon emissions in the West.
Why is China reconsidering its decision now?
Critics of the ban estimate that China would have lost $4 billion in annual mining revenue if it had chosen to regulate the activity rather than ban it. It should have seized the opportunity to innovate in regulation and technology to stay ahead of the global economy. Instead, it is trying to keep pace with a market that has grown so much without China’s intervention.
China’s recent attempts to reconsider its mining policy are a step in the right direction for its local investors and the cryptocurrency market. Adding more funds to DeFi’s growing market cap and expanding its adoption is always helpful for its long-term development. The world is watching China’s decision to ease this ban and adapt accordingly.
If the ban is lifted, what does this mean for the Bitcoin community?
China is an economic and technological powerhouse in every sector. Its involvement in any sector drives the rapid development of that field and the addition of Bitcoin will always result in a positive net result. Among the most interesting projects, they can try to help improve Bitcoin’s energy consumption to align with their carbon neutrality goals.
Another area where they can contribute is increasing the adoption of cryptocurrencies, not just for Bitcoin, but for all digital assets, including Layer 2 tokens. crypto casino games is also one of their interests because of their large investments in offshore gambling. Regardless, Chinese investors returning to the market crypto The circle is highly anticipated.