China’s Crypto Mining Rigs No More
China’s central bank views decentralized currency as a threat to the state’s economy and views it as an incentive to use it for illegal purposes. To combat the increasing popularity of cryptocurrency, China has done two things. Various Chinese provinces, including the two top crypto mining provinces, have shut down the power allotted to crypto mining businesses, resulting in the suspension of activity and relocation of these businesses. In addition, China has started to develop its own E-currency based on its standard currency, the yuan, to ensure the e-currency used in the state still has a centralized backing. Furthermore, the government has forced multiple large state-owned banks to “block payment services for any client accounts thought to be involved in cryptocurrency transactions. They were also told to cease offering other services such as account opening, registration and trading for any cryptocurrency-related activities.”
The relocation of crypto mining businesses may benefit other countries. As of April 2020, China accounts for over 65% of the total monthly share of hash rate in the world. In need of areas with cheap energy, many crypto mining businesses have already started to relocate to nearby Kazakhstan and possibly to various U.S states. Kazakhstan now contributes the 4th most worldwide to the monthly share of hash rate at 6% and the United States at 2nd place with over 7%. Cities in the United States are also promoting low energy rates in hopes of attracting crypto mining businesses: Miami being a prominent example. In addition, other cryptocurrency businesses, aside from mining, are relocating as a result of the shutdown of mining companies. With businesses migrating to different countries, China may quickly lose its dominance in the crypto mining and hash rate. The only clear implications have been the negative plummet of value in many cryptocurrencies and hash rate speed. It's near impossible to determine the long-term effects of the migration of so many crypto businesses to other states; however, it’s likely to see a negative impact on China’s economy and a slower return of value to many high-valued cryptocurrencies.
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