China was the most significant cryptocurrency market at the very first stance of 2021. However, recently higher authorities of China announced a cryptocurrency crackdown in the nation. China has been intensifying cryptocurrency crackdown in the country since the announcement.
Recently the National Bank of China announced that every possible transaction of cryptocurrency is illegal. The statement of the national bank declined the store value of bitcoin by almost 5%. Bitcoin is one of the prominent cryptocurrencies that have the largest market cap. Recently the cryptocurrency crackdown in China led to a cryptocurrency crash.
The market crash declined the store value of bitcoin exceedingly. Bitcoin is a cryptocurrency; Satoshi Nakamoto, the inventor of bitcoin, released bitcoin to facilitate transactions between sender and receiver. However, people started to use bitcoin only to make money. Since bitcoin is a free and politically independent currency, the store value of bitcoin is very fragile.
Due to bitcoin’s fragile value, bitcoin trading is exceedingly profitable. So, if you want to get profitable results in your bitcoin trading journey, check the bitcoin circuit for more details. Here is everything you should know about the latest update about China’s intensifying cryptocurrency crackdown.
- What were the reasons behind the cryptocurrency crackdown in China?
- Recent Announcement of National Bank of China!
What were the reasons behind the cryptocurrency crackdown in China?
As mentioned ahead, China was one of the biggest crypto marketplaces. Bitcoin returns are very tempting, and it fascinates investors to invest money in bitcoin. However, bitcoin is a volatile cryptocurrency which means the store value of bitcoin is not stable at all. The fact might surprise you that China banned bitcoin trading way before in 2019. However, bitcoin trading was still possible with the assistance of foreign exchange till May 2021.
The prominent reason why China announced a cryptocurrency crackdown is bitcoin’s volatile nature. The volatile nature of bitcoin was acting like a financial threat to the country’s economy, as per few rich sources. Here are some of the prominent reasons why China announced a crackdown on cryptocurrency.
Bitcoin’s volatility- bitcoin’s volatile nature was concerning many financial authorities of China. Although last year China pocketed a revenue of almost $100 billion from cryptocurrency, the country still banned bitcoin.
Bitcoin mining- Bitcoin mining is correspondingly one of the prominent reasons why China’s financial authorities announced a cryptocurrency crackdown. Bitcoin mining is the process of adding new bitcoin units to circulation. Bitcoin mining consumes a massive chunk of energy.
The only energy source which Chinese miners used to an exceeding extent was electricity. The prominent reason behind this fact is that electricity in China is much cheaper and accessible.
China was the capital of bitcoin mining, contributing more than 65% of the hash rate in the global bitcoin mining chain. In a nutshell, bitcoin mining’s electrical consumption in China was affecting the environment to an exceeding extent.
Recent Announcement of National Bank of China!
China has kept shocking everyone with its crypto regulation rules since the midst of May. Recently the national bank of China announced that any cryptocurrency transaction is now illegal in the country. All the more, it utterly damages the safety of people’s assets. Even after the cryptocurrency crackdown, some businesses and institutions were accepting bitcoin as a payment method. However, China clearly stated that bitcoin mining, acceptance of bitcoin as a payment method, and bitcoin trading are illegal in the country.
Effects on Bitcoin miners
Since China is the capital of bitcoin mining, after the bitcoin mining ban in China, bitcoin miners find it hard to mine bitcoins. As a result, most of the bitcoin miners are moving to different countries to continue bitcoin mining.
Bitcoin miners prefer Texas to mine bitcoin as the cost of electricity in Texas is much lesser than in the entire United States and other countries. Higher authorities have stated that Texas will become the new hub and hotspot of bitcoin mining.
After the bitcoin mining ban in China, bitcoin mining is now more profitable for the bitcoin miners elsewhere. As a result, there was a sudden slump in the difficulty of the bitcoin mining process, and bitcoin mining pools were getting more block rewards without investing in rich sources.
These are some of the facts about the latest announcement of people banks regarding bitcoin and other cryptocurrencies.