After years of chipping away at the Bitcoin mining industry, it is starting to become clear that China wants to leave this industry in the dust. The biggest reason for not such a sudden change of heart is due to China’s new environmental policy.
President Xi Jinping wants China to be the champion of environmentally friendly production, as foreign criticism and pressure are starting to mount due to the country’s overwhelming share of pollution. But this was to be expected. If you’re the biggest manufacturer, it’s likely that you produce the most pollution as well. But due to heavy reliance on Chinese products, most of the world preferred to look the other way.
Now that manufacturing initiatives are springing up worldwide, China needs to once again become the “better” option in contrast to domestic production for most countries. Taking a new stance about environmental consciousness is just a small step towards that goal, and Bitcoin is a small speed-bump it’s slowing down to cross over.
Is This the Crypto Mining Apocalypse?
Both Yes and No. The thing is that crypto’s fate will yet again fall into the hands of private companies and individuals once China has rid itself of mining farms. Why? Because the demand for cryptocurrencies will simply remain the same, so most miners could just pack up and move to a more forgiving location nearby. This could be South-East Asia, Russia, the United States, or even North Korea.
However, should this not happen, and for panic to ensue, then it’s likely that we will see a crypto market drop the likes of which has never happened before. By taking away the world’s largest mining hub, crypto transactions suddenly become extremely expensive and slow, losing the overall value of Bitcoin, not to mention the massive sell-off that the miners will have to do.
But This Has Happened Before, No?
Yes. Miners have panicked before and sold off most of their rigs and Bitcoins, but not to the extent where the whole shebang is banned. Furthermore, let’s not forget that mining Bitcoins was much cheaper even in 2017 when a peak price was considered to have been reached.
This has mostly to do with the halving of BTC mining rewards. Every 4 years or so, miners have to take a massive hit of getting just half of the coins for the same amount of energy they spend. This has already squeezed small-scale mining farms out of the market, thus concentrating and centralizing most of the output in China.
Therefore, should this shift in power not be contained immediately by the crypto community, the crypto market is likely to return to its levels of 2017 for a brief period of time.
How is The World Preparing for Crypto Mining?
This is not news for just me the reporter and you the reader at this point. Anyone who is anyone in the crypto market knows about this, anticipates this, and is preparing to deal with it. Miners outside of China are already negotiating a fair deal on new rigs to meet the new demand after the inevitable, and traders are starting to incorporate signals regarding mining in their strategies.
One particular approach to this can be seen with trading bots and how they’re changing their strategies for day trading crypto.
The Bots are Learning
The most recent lesson for cryptocurrency trading bots came in the second week of June, when Chinese miners dumped around 5,000 BTC within just a few days. Many traders did not even consider this to be possible for miners to do as they usually prefer keeping their rewards and then staking them for additional coins.
But now, signals on massive coin movements from known miners are being monitored more closely. According to Bitsgap, a company that produced one of the most modern crypto trading bots has noted that a significant part of its customers have re-arranged their strategies on the software and are bracing themselves for any future sell-offs from known mining accounts.
This can be seen across the board as traders prepare for yet another flash crash after the market recovers a bit after its latest uppercut. Bearish momentum remains firm and miners are still looking for opportunities to bail.
When Could the Crackdown Happen?
China’s plan to lower carbon dioxide emissions is set to end by 2030. The plan includes lowering emissions by 65% and raising the share of non-fossil energy by 25%. What this means is that China needs to be very careful on who it allows to consume as much as they do. And even though crypto mining is a lucrative business and is not even in the top-10 electricity-heavy industries in China just yet, it’s unlikely to get a pass. Why? Because it’s not really sustainable. A guarantee of 50% drops in revenue every 4 years is a real deal-breaker. However, other industries like steel and electronics promise a much brighter future.
It is likely that the 2030 plan is divided into several segments. This could be segments of 5 years. Therefore, the likeliest crackdown was anticipated in 2020, but COVID happened, messing up the plans.
Therefore, experts now predict that a much harsher approach will be undertaken in 2025, just in time for yet another BTC halving.
Once China approaches the final 5 years of its plan, it’s likely that crypto miners will start feeling the squeeze.