Bitcoin has fallen by 6.55% in the past 24 hours to a price of $33,068, which is down 17.66% this week. This is directly related to the large-scale suppression of Bitcoin mining farms and transactions in China.
This crackdown started at the end of May and immediately caused the price of Bitcoin to fall by 30%, and the entire cryptocurrency industry lost billions of dollars. So far, many Bitcoin miners, including Inner Mongolia and Sichuan, have been forced to permanently close their mines, and many Bitcoin miners have moved their businesses to overseas regions that are more conducive to Bitcoin mining.
On May 21, domestic high-level officials officially stated that China will become the first country in the history of cryptocurrency to suspend cryptocurrency mining and trading activities .
The reason for the closure is due to the energy consumption of Bitcoin mining. Bitcoin mining in China uses more electricity than the Netherlands every year.
The country has been looking for ways to reduce carbon emissions, and Bitcoin mining still uses fossil fuels as the main source. According to statistics, due to the closure of mining platforms, the country has restored 8,000 megawatts of electricity.
At the same time, mining companies may move to North America and Europe. In addition to the setback of Bitcoin prices, the blow also caused a sharp drop in the price of cryptocurrency mining equipment in China, which is the world’s largest producer and exporter of mining equipment.
“In the long run, as Chinese regulators crack down on mining activities at home, almost all crypto mining platforms in China will move overseas .”
Before this attack, China accounted for more than 70% of the global mining hash rate, but the current shutdown will eventually distribute computing power to foreign markets, especially North America and Europe.
Some analysts predict that this is good news for Bitcoin, whose price and computing power are often severely affected by domestic mining trends.
Crypto investor Lark Davis stated on Twitter: “We are undergoing a huge reorganization of miners. This is the largest and most serious crackdown in China’s history. It is expected that a new geographical distribution of computing power will appear in the next few weeks .”
At present, Bitcoin mining machines weighing more than 3 tons are shipped from China to the United States, and Texas may accept some Chinese mining companies. Texas is one of the preferred locations for U.S. mining companies , and its affordable energy prices and huge investments in renewable energy account for 20% of the U.S. energy supply.
The Mayor of Miami also launched a plan to turn the city into a Bitcoin mining center in late May.
The latest report from the South China Morning Post shows that GPU prices will be sold at a high premium in early 2021. Six months later, after experiencing this crackdown, the price of GPU dropped by about 66%. At the same time, in Australia, the GPU stock market pulled back 5-10% as the mining industry in the region started to heat up.
There are many factors that will influence the miners to choose a new mine. The first is the low cost of electricity. Since mining is an energy-intensive industry, energy prices must be low enough to make miners profit, which means that new locations must have lower energy costs .
Another factor is the supply chain. It is very important to have established technical management and stable mining machines .