Tuesday, June 25, 2024

“Bitcoin cannot be destroyed.” What’s happening to the mining industry?

Three Chinese provinces have already banned cryptocurrency mining. How this will affect the field of crypto mining in the long term and which countries are now the most promising for companies mining digital assets?.

The mining of cryptocurrencies has already been banned at the state level in three Chinese provinces. This has already been announced by the authorities of Yunnan , Qinghai and Xinjiang provinces .

In this regard, large miners have already begun to leave China and transport equipment to other countries. Against this background, the hash rate of the bitcoin network dropped to 99 Eh / s in early June.

As of June 15, the hashrate of the main cryptocurrency has partially recovered and is 130 Eh / s, according to the Bitinfocharts service. Experts explained how the cryptocurrency mining industry is transforming based on recent events.

Relocation trend

It is premature to talk about the complete exodus of miners from China, says Roman Nekrasov, co-founder of the LAZM data center.

Some provinces have not yet banned the mining of cryptocurrencies, he said. For example, in one of the main hubs of crypto mining – Sichuan province – a ban is expected from September, the expert says.

But, according to Roman Nekrasov, the tendency towards relocation among miners is still traced, since companies are now working on the issue of moving equipment to other Asian countries, for example, to Kazakhstan.

Some industry representatives are considering moving to the United States and Canada, where hydropower is well developed, as an option, the expert noted.

Impact on mining

In the near future, the effect of such bans and restrictions is negative, since any attacks on bitcoin miners lead to concerns about the stability of the network, Roman Nekrasov believes.

However, according to him, in the future, this can lead to positive consequences, such as an increase in the level of decentralization of the network.

For any system, such restrictions are turbulence and uncertainty, says Nikita Soshnikov, director of the cryptocurrency exchange service Alfacash.

He believes that the owners of mining enterprises, who are forced to in a hurry to look for places to relocate or decide to close the farm, are in a very difficult situation.

The only positive point that the expert sees in the mining ban in China is another demonstration that bitcoin cannot be destroyed by any restrictions.

“The system is designed decentralized enough to withstand such attacks. I cannot call the decision of the Chinese authorities anything other than an attack, ”explained Nikita Soshnikov.

Prospective countries for relocation

The most promising countries for moving among cryptocurrency mining companies are now the United States and Canada, says Roman Nekrasov.

According to him, these countries already have fairly clear regulation and taxation, but electricity prices can be significantly higher than those that miners are used to in China.

Miners can also consider Brazil, Kazakhstan and Tajikistan, but these countries lack clarity of regulation, so small companies are moving there that are ready to work in the gray zone, explained the co-founder of the LAZM data center.

By many parameters, Russia is also suitable for the relocation of miners, alone so far the companies for the extraction of cryptocurrencies are not interested in Russian sites, explained Roman Nekrasov.

In his opinion, the Chinese are not ready to risk their business due to the unfriendly investment climate and opaque crypto regulation.

Nikita Soshnikov does not exclude that some of the miners from China may move to Georgia. The expert recalled that Chinese investors already have mining facilities in the economic zone near Tbilisi.

The regulation of cryptocurrencies in Georgia is very friendly, added the director of the cryptocurrency exchange service Alfacash.

Green energy

The transition of cryptocurrency mining to green energy in the future can increase the attractiveness of digital assets, says the co-founder of the LAZM data center.

According to him, this will happen in any case, even if not directly, then via tweets from the CEO of Tesla and SpaceX Elon Musk. When a businessman again begins to openly support bitcoin, and not attack the coin, his multi-million army of fans will rush to buy up the cryptocurrency and its quotes will go up, Roman Nekrasov is sure.

“Musk has a very populist approach, but, as we can see, it works,” the expert added.

On June 14, Elon Musk announced that Tesla will start accepting bitcoin again after most of the miners use renewable energy sources. After the businessman’s statement, the main cryptocurrency grew by 12% and exceeded the $ 40 thousand mark.

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