This is not the first time that China has banned crypto, but this time it seems serious. Reports of China banning crypto again have created FUD (fear, uncertainty, and doubt) among investors. And this has led to a steep price crash of Bitcoin to $31,155 on Monday. And this price fall of Bitcoin has pulled down prices of altcoins with itself. Ethereum has also fallen below the critical $2000 price point while LTC is below $130. All major cryptocurrencies are at one of the lowest points since the crash happened.
Has China banned crypto again?
Yes, China has banned crypto again, and the mining firms are shutting down due to the same. China has ordered all mining projects to close in the southwest province of Sichuan on Friday. This has resulted in a significant hash rate drop which is roughly equal to mid-2020. And we all know that the price of BTC and its hash rate move in strong correlation, which means that the drop will also be together. Even when there was an electricity outage in China and a major BTC mining firm was offline, the prices took a significant hit.
According to the government of China, the reason for this crackdown is to reduce the financial risks associated with Bitcoin. At the same time, having so many mining facilities in China means that their environmental impact is huge. And this goes against China’s plan to go carbon neutral by 2030. It is also probable that the price of Bitcoin is pushed lower by the large numbers of mining facilities selling their coins.
I would say it’s a good thing!
Even though I am an investor in Bitcoin and believe in its goal to decentralize currency, somewhere, it became clear that China had too much power over it. Elon pointed out in a tweet that how can you say that Bitcoin is decentralized if it falls so much on the shutting down of a single mining firm. And therefore, I think that this China ban is a good thing. It will make sure that the hash rate is distributed more evenly across the globe. At the same time, future FUDs regarding China won’t significantly impact Bitcoin, if any. Obviously, I am not happy that the price dropped, but it is absolutely okay.
What are your thoughts on the price drop due to the shutting down of mining firms in China? And do you think that in the long run, it is a good thing? Let us know in the comment below. Also, if you found our content informative, do like and share it with your friends.