What’s happening right now with Bitcoin in China? It’s important because, as one of the world’s largest superpowers, China has the capability to move markets in particular ways. It’s also home to the majority of Bitcoin mining activity, which is essential for this emerging cryptocurrency network. Let’s look at the context and what China’s newest moves may mean.
Banning Bitcoin as Bitcoin Evolves
Actually, Chinese officials have tried to ban Bitcoin several times, cracking down on both mining and trading. Efforts in 2013, 2017, and 2019 were periodic bumps in the road for those who want to profit from the original cryptocurrency that’s taking on its own blockchain economy worldwide.
New Chinese ban activity is also affecting. We’ll talk about some of this shortly. In general, one criticism of the Chinese government’s ongoing relationship with Bitcoin is that Chinese officials seem to like to commence enforcement activity during booms in the coin’s value. This new ban, however, is a bit different in some ways. China is primarily targeting Bitcoin miners, citing carbon-neutral goals for the country in 2060. In other words, this isn’t just an economic crackdown. It has to do, ostensibly, with ecology.
China and Elon Musk
This Chinese ban is also taking place while the value of the cryptocurrency is actually struggling. Even seasoned professional analysts do not ignore one person’s role in helping to direct that coin price downward.
Elon Musk of Tesla and SpaceX fame contributed to higher Bitcoin prices (in past months) by going public with his Tesla company’s plan to hold lots of Bitcoin in capital reserves and even accept Bitcoin for payment on Tesla vehicles.
Just a few weeks ago, Musk reversed course, saying that he no longer plans to have Tesla take payment for its vehicles in Bitcoin. He gave a particular reason – the energy-intensive mining activity required to generate Bitcoin, which again mostly occurs in China.
So in that sense, Musk and China have the same concerns. They are very different stakeholders – one went on Saturday Night Live in America to talk about cryptocurrency, while the other has over 1 billion people as citizens and monitors their use of the Internet.
Though, what they have in common is criticism of Bitcoin as an energy hog – and those concerns are part of what we see on the market as Bitcoin prices fail to come back to all-time highs around $60,000. The coin’s value is essentially cut down to two-thirds, and BTC struggles to poke its head over the $40,000 mark.
A blog post at Bybit talks more about the details of Chinese banning activity, putting recent moves in context. It seems that although the Chinese haven’t really banned cryptocurrency outright, they do have concerns about its function in national economies, and part of that is related to the idea of energy conservation.
Look for new developments, and track cryptocurrencies that generate their own returns for investors while being used for everything from gaming to smart cities. The regulatory context is going to be important in these markets.