One of the major events regarding cryptocurrencies has been China’s actions against the financial vehicle, which was ground-breaking. China’s central bank banned all cryptocurrency transactions, essentially banning cryptocurrencies from the country, which was being implemented since May. This posed a problem to miners too as most of the global mining was done in China. In China, they were able to use cheap coal-powered energy to mine bitcoin on supercomputers, and it was efficient as the gains were able to beat the costs. Nearly half of the global computing power towards crypto mining was in China. However, China didn’t like the idea of cryptos as they felt it endangered citizens and that it’s a criminal currency.
China’s importance to cryptos caused a dent in the price, with Bitcoin falling by nearly 50 percent. Those weren’t good times, but Bitcoin is back to all-time highs, shrugging China off its shoulder. Mining has now shifted to other countries, one being Kazakhstan. Kazakhstan received a heavy volume of Bitcoin mining as it was next door to China, and it had cheap electricity. Their prime minister announced a couple of weeks ago that they would limit the amount of electricity miners can use, but Kazakhstan isn’t the global leader. With more than a third of the mining computing power, the United States is now the hub of cryptocurrency mining. The reason for this is that the US legal system is built so that it takes time for regulation and legislation to go into effect, giving miners the ability to predict regulation very easily. Currently, there aren’t many restrictions regarding mining, even with the SEC trying to regulate, and southern states like Texas and Florida are seeing the most crypto mining activity in the US. Unfortunately, this is causing some environmental controversies, with companies bringing fossil fuel plants back to power mining, causing New York to consider a fossil fuel ban for mining. With Democrats in control, we’ll see if mining takes a hit due to its impact on the environment. Do you think mining activity will shift elsewhere?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.