Most cryptocurrencies are mined in digital mines in China, which are estimated to account for 65% of the global supply. But China is not satisfied with this.it Minen It consumes a lot of power, and it is almost impossible to monitor who deals with it. This is why the country is trying to restrict coins such as Bitcoin.
On Friday, China announced that electricity suppliers in Sichuan Province must find and shut down cryptocurrency servers. There are many hydroelectric power stations in Sichuan that provide cheap electricity. Yesterday, the Central Bank of China decided not to allow banks to cooperate with Bitcoin transactions.
China has been fighting against cryptocurrency for many years. These new announcements will affect the price of digital currencies in the short term. Yesterday the value fell by 10%, but it has stabilized again. Nevertheless, the experts don’t seem to care. Patrick van der Meade, chairman of United Bitcoin Corporation Netherlands (VBNL): “Bitcoin is still unstable. If Elon Musk tweeted, the price will fall. But this 10% drop is much less than in the past.”
For many reasons, China is worried about cryptocurrencies. It wants to centralize the supervision of the market as much as possible, and Bitcoin is a decentralized system. In addition, the government cannot control who conducts which transactions, and funds may disappear abroad.
China is also studying another option: the digital renminbi. It must be separated from the existing financial system, but unlike cryptocurrency, users cannot remain anonymous. The digital renminbi has not yet been officially launched, but it is being tested in multiple cities.
Please also check NOS op 3’s explanation of Bitcoin’s popularity:
Bert Slagter of the Lekker Cryptisch platform and the host of the podcast Satoshi Radio about cryptocurrencies are not expected to fall sharply due to Chinese policy: “You see such a price drop because of uncertainty among investors. But this is not a trend breakthrough. , For example, it dropped from $65,000 to $40,000 between April and May. Bitcoin’s current trading range is between $30,000 and $40,000.”
However, there are practical consequences. The computing power of the Bitcoin network has dropped by nearly 20%, partly because the first 26 Bitcoin mines in Sichuan have been closed. This makes the transaction speed slower. Slagter: “Bitcoin has a self-regulating mechanism. After two weeks, the protocol can adapt so that transactions can proceed at the same speed again.” (see box)
The company is now moving their hardware to other countries. “Basically, it’s picking up your things and going to another area with a good internet connection and stable power supply,” Van der Meade said.
He also saw the advantages of Chinese policy. So far, a lot of computing power has been concentrated in China. “If computing power is better distributed around the world, the Bitcoin network will become stronger. If there is a problem with the power supply in a region, the network will be less affected.”
Bert Slagter added this. “The idea behind Bitcoin is that it is decentralized. Therefore, as computing power spreads more and more worldwide, no country has too much control over the system.”
In fact, according to Slagter, what is happening now is a touchstone. “China is an authoritarian regime, it makes decisions mining Prohibited so can be taken. If Bitcoin can survive, I don’t think any country in the world can unplug Bitcoin. “