Bitcoin has fallen 10% in the last 24 hours to trade at $ 31,600 and take the weekly low to 22% in an event directly related to the massive crackdown on bitcoin mining farms and trade in China.
The crackdown began in late May and immediately caused a 30% drop in the price of Bitcoin, causing the entire cryptocurrency industry to lose billions. So far, many bitcoin miners, including those in Inner Mongolia and Sichuan Province, have been forced to permanently shut down their farms, with many relocating their businesses to more mining-friendly overseas locations.
On May 21, a state council headed by Vice Premier Liu He officially declared that, for the first time in cryptocurrency history, China would suspend cryptocurrency trading and mining activities in the country.
Crypto mining companies relocate to North America and Europe
In addition to thwarting the price of bitcoin, the crackdown has also caused a significant drop in the price of cryptocurrency mining equipment in China, which is also the world's largest producer and exporter of mining rigs.
According to Jiang Zhuoer, founder of one of the largest bitcoin mining pools, BTC.TOP, the company and many others in China would be forced to take their businesses abroad.
"In the long term, almost all Chinese crypto mining rigs will be sold overseas as Chinese regulators crack down on mining at home."
Until the crackdown, China was home to more than 70% of the total global mining hashrate, but the ongoing shutdown will eventually distribute crypto computing to foreign markets, especially in North America and Europe.
Some analysts have predicted that this will be positive news for Bitcoin, whose price and hashrate often fall under the strong influence of mining trends in China. Crypto investor Lark Davis He said On twitter:
“We are suffering a huge mining shock, this repression by China is the largest and most serious in history. Expect the hashrate geographic distribution to occur in the next few weeks. This is good! #bitcoin ”.
Texas likely to absorb some of China's mining business
Texas is one of the hot spots for miners in the US, due to its affordable energy prices and its huge investment in renewable energy sources that represent up to 20% of its energy supply.
The mayor of Miami also capitalized on the displaced mining business in late May, launching plans to make the city a bitcoin mining hub.
The latest report from the South China Morning Post shows that prices for GPUs, which were selling at a high premium in early 2021 and a waiting list of nearly six months, have fallen by around 66% after the crackdown. Meanwhile, in Australia, GPU equity markets are recovering to pre-pandemic levels of around 5-10% as mining in the county begins to recover.