DeutschChina’s latest efforts to regulate Bitcoin (BTC) appear to be having a significant impact on the mining and exchange business. Last week, China’s State Council decided to ban Bitcoin trading and crack down on mining activities. Although the regulatory hammer hasn’t officially fallen on the latter yet, the Chinese State Council meeting immediately sparked panic among miners.
Bearish sentiment among Chinese miners
Last week, China banned financial institutions in the country from offering Bitcoin services and also announced it would crack down on crypto mining. This latest regulatory move is already having a noticeable impact on the Bitcoin ecosystem, as crypto miners and exchanges in the country significantly scale back or shut down their Bitcoin-focused activities. In the coming weeks, there will be some enforcement measures, but nobody knows how far they will go. Chinese miners are turning bearish.
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So far, China-based mining pool BTC.top, which accounts for around 1.5% of Bitcoin’s total hash rate, has announced that its subsidiary B.top, which brokers mining machines, will no longer serve customers in mainland China. Crypto exchange Huobi, which also operates a Bitcoin mining pool, said in a statement that it will stop offering its miner brokerage service to new users in mainland China. HashCow will also stop buying new Bitcoin mining rigs, according to Reuters.
The average Bitcoin hash rate has fallen since Thursday. As a result, the average block production interval on the Bitcoin network was around 11.8 minutes, already about 20% longer than the intended 10 minutes per block.
Miners move overseas
While many miners began selling their crypto assets the same day—triggering the crash across the entire crypto market—others are trying their luck with mining facilities overseas.
“In the past 48 hours, Chinese miners have already started accelerating the migration process to other countries. Large quantities of BTC mining machines are also being offered for sale,” tweeted Mustafa Yilham, who leads overseas business at Bixin, a long-established Bitcoin mining company in China.
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The Chinese crypto pool Poolin is also already focusing on working with mining operations overseas to distribute its business more globally. However, this has also been part of the business plan since the conference in April. During that conference, various panelists said that China’s long-standing dominance of the Bitcoin hash rate had already declined with the rise of institutional buyers from Europe and North America.
The Bitcoin business landscape is changing
Crypto exchanges also need to be legally aligned with significant changes in the framework of crypto regulation. At least those operating in Hong Kong now have to obtain a license from the city’s market regulators and may only provide services to professional investors.
“There are dozens of cryptocurrency exchanges in Hong Kong, including some of the largest in the world. Under Hong Kong law, a person must have a portfolio of HKD 8 million (USD 1.03 million) to be considered a professional investor,” Reuters said in a report.
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Although Bitcoin is fundamentally not dependent on the approval of a government or any other third party, it does appear that China’s latest rules will change the Bitcoin business landscape—at least in the short term.
Elon Musk talks to BTC miners about sustainability
In a new tweet, Tesla CEO Elon Musk said he had spoken with North American Bitcoin miners about crypto sustainability. The Bitcoin price immediately rose by USD 2,000. Back in February, Tesla added $1.5 billion worth of Bitcoin to its balance sheet and announced it would accept BTC as payment for its cars. Earlier this month, however, Musk announced that Tesla would no longer accept Bitcoin for environmental reasons. After the crash that followed immediately, sustainability and eco mining have become hotly debated topics.
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Michael Saylor, CEO of software company MicroStrategy and a well-known Bitcoin advocate, said he led a meeting yesterday with Musk and mining companies such as Argo and Hut 8. He also said these miners had “agreed to form the Bitcoin Mining Council to promote transparency in energy use and accelerate sustainability initiatives worldwide”—although it’s still unclear what exactly that means.
Whether Saylor’s “Bitcoin Mining Council” can do anything about Bitcoin’s climate impact remains to be seen. But it has clearly already had an impact on Musk—and therefore on the Bitcoin market.
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