By FintechNews staff
When China’s bitcoin crackdown came into effect, many speculated that the industry would never recover. Amazingly, though, the ban served to highlight both the resilience of the sector and the entrepreneurial spirit of the miners who keep the wheels of the blockchain turning.
There are many reasons behind China’s bitcoin ban. Not only were lawmakers spooked by the asset’s volatility, but they were, like various governments around the world, perturbed by their inability to influence it. Moreover, the energy-intensive nature of bitcoin mining — around 40% of Chinese bitcoin mines were coal-powered by some estimates — threatened to undermine Beijing’s commitment to reach carbon neutrality by 2060.
Of course, it didn’t take a genius to realize that the CCP was unsubtly shifting the spotlight to its own state-backed digital currency. According to experts, the PBOC is likely to be the first to launch a fully-fledged CBDC.
In what has been dubbed the “great mining migration,: miners based in provinces such as Xinjiang, Inner Mongolia, Sichuan and Yunnan quickly powered down their rigs and fled to pastures new: Kazakhstan, Russia and North America.
In light of subsequent events, China’s withdrawal from the stage can only be seen in a positive light. After all, consider what has transpired since the ban was announced: bitcoin hit a new all-time high of over $68,000; the first BTC futures exchange-traded fund (ETF) launched in the U.S., allowing investors to buy and sell exposure to the asset outside of exchanges; hashrates on the blockchain have bounced back up to the same levels seen in May when China imposed a blanket ban on cryptocurrency trading, mining and related activities, and the United States became the world’s dominant mining hub.
It’s likely, too, that U.S. investors are reassured by the dwindling influence of China on the mining landscape. Especially since firms like Lancium are investing heavily in Texan bitcoin mines that run on renewable energy.
The US is a particularly attractive destination for miners, as certain states rank among the world’s lowest regions for electricity prices. There are also a lot of renewable energy trading options that can mitigate negative sentiment around bitcoin mining’s sustainability.
Around 16 gigawatts of new wind and solar projects are set for construction in West Texas over the next year alone.
The move to be more energy-efficient is a major trend that major crypto asset management firm Valkyrie Investments is watching this year. Valkyrie is looking at “the concerns over sustainability and meeting ESG criteria,” said Leah Wald, CEO of Valkyrie Investments, on the ETFs 2022 webcast hosted by ETF Trends and Investopedia. “We’ll see that emerging class of publicly traded bitcoin miners also increasingly relying on renewable energy sources.”
