The Chinese government issued several policies regarding the banning of Bitcoin. One of them is banning Bitcoin mining. This has both positive and negative impacts.
As we know, the government ban also made the price of Bitcoin fall by about half. Because what is prohibited is not only mining but also transactions using crypto assets as payment.
The prohibition of mining also has positive and negative impacts. In this article, we will discuss what are the positive and negative impacts of China banning Bitcoin mining.
Positive Impact of China Banning Bitcoin:
More Stable Supply
Until now, Bitcoin in circulation or has been successfully mined is 18.7 million BTC. While the maximum supply of BTC is 21 million. The rarer Bitcoin, the higher its price.
China has the largest Bitcoin mining center, which controls 65%. With the government prohibiting Bitcoin mining, the supply or circulation will be less and less.
Although currently, Bitcoin is still in a sideways trend at the level of Rp. 500 million and Rp. 600 million. However, less mining can reduce supply or circulation.
In fact, not only Bitcoin, other mining such as Ethereum, Litecoin, DOGE and others have also decreased a lot. That is, it does not only affect Bitcoin, but also other crypto assets.
So, in the future, the price will increase, as we expected.
There is a lot of energy required to mine Bitcoin. One RIG mining computer must have a minimum of 6 VGA units. Typically, a mining company has hundreds to thousands of RIG computers.
China, which is believed to control 65% of Bitcoin mining, certainly makes it unfriendly to the environment. So, the government that prohibits Bitcoin mining will make a better climate change.
Because basically blockchain technology is also present to solve all problems more efficiently and safely. Of course, it also includes solving climate problems.
Like what the Ethereum Foundation did, changing the proof of work (mining) scheme to proof of stake (staking). Although, not 100% using the new scheme, the PoS scheme is certainly more environmentally friendly.
Staking does not need to use a computer with special abilities. In fact, it can only be done with a smartphone.
Speed Up Bitcoin Mining Network
Miners in other countries don’t actually have to worry about China’s policy of banning Bitcoin mining. Because Chinese mining no longer exists, the network is quiet and faster.
Mining speed or Bitcoin hashrate itself was previously at 179.25 ExaHashes (EH) per second.
This figure looks to have been reached around May 13, 2021 to May 30, 2021 before experiencing a significant decline.
However, after undergoing adjustments to the entire network on May 30, 2021, the speed has changed to 150.48 EH per second.
Negative Impact of China Banning Bitcoin:
Price Dropped and Still Not Recovered
News about China banning Bitcoin mining could potentially increase prices. However, in fact, until now, the price of Bitcoin has not returned to the highest level of Rp. 800 million-Rp. 900 million.
This is because it is accompanied by negative news related to other Chinese policies. One of them is prohibiting the use of crypto assets as a means of payment. Also prohibits banks from managing crypto assets.
Bitcoin Transactions Decrease
One other impact is the decline in people’s trust in Bitcoin and other crypto assets. Because a lot of negative news comes from the case of China which prohibits Bitcoin mining.
This of course makes people leave Bitcoin. So the total volume or transactions decreased drastically. This happened not only because of the ban on mining. But, also because of the declining prices.
In Indodax volume alone, for example, Bitcoin is no longer in the top 5 crypto asset volumes. Usually, Bitcoin is at number 1, number 2 or number 3. However, people put their trust in alternative coins (altcoins), even though many of them are still at resistance levels.
Is it Wrong to Buy Bitcoin Today?
After reading the article above, do you think this is the right time to buy Bitcoin? Or do you prefer altcoins to invest?
You can buy Bitcoin and altcoins at the best place, namely Indodax. Become a reliable trader by investing in Indodax. Keep watching Indodax.Academy and other interesting content about bitcoin mining on Indodax’s official social media.