Chinese crypto miners that shut their operations down a few weeks ago could relocate in other countries such as the United States and Canada. This is according to Point Pay cryptocurrency analysts, who shared their views with UseTheBitcoin in a recently released report.
At the same time, the experts have analysed the impact that the recent mining ban would have on the market and how this could change the way in which the industry works. Generally, most of the implications to the crypto industry are positive.
Crypto Mining Ban in China
In mid-2021, several Chinese provinces decided to ban Bitcoin mining activities in their territories. This came amid a debate in the crypto industry on the energy consumption required by miners all around the world and their impact on the environment.
According to Andrew Svyatov, the CEO of the Point Pay, the mining map of the world is expected to change in the near future, having consequences for miners, investors and equipment manufacturers.
Most of the crypto miners in China were located in Inner Mongolia, Xinjiang, Qinghai, Sichuan and Yunnan. Due to different reasons cited by local governments, they decided to ban crypto mining activities there.
If we see Bitcoin’s hash rate, it has fallen by over 50% since the ban entered into force. This shows how strong the mining industry was in China and the impact that this measure had on the Bitcoin network and its security.
At the same time, another FUD reason that spread in the market was related to how contaminating the Bitcoin mining industry was. Specifically, Tesla’s decision not to accept Bitcoin for its cars anymore affected Bitcoin’s price in the short term.
Nonetheless, as Svyatov explains, mining is no more harmful to the environment than any big data centre in the United States.
The main question now is where will Chinese crypto miners move now that they cannot operate in China? Could they go to North America or would they prefer Asia? Will they find new and better energy sources?
Could Chinese Crypto Miners Move to North America?
According to Point Pay analysts, it might be possible for Chinese crypto miners to move to the United States, Canada, Central Asia and Afghanistan. In general, when crypto miners analyse the regions where they could operate, they search for countries with cheap energy prices, low temperatures and stable governments.
Andre Svyatov explained that the relocation of miners is expected to take several years and they would also have to face financial and logistical problems.
On the matter, Andrei Svyatov explained:
“Obviously, in the first year and a half, the relocation of miners will be chaotic and panicked. Miners will have both logistical problems and financial losses, there will be testing of new locations for farms and rejection of them.”
In addition to it, Svyatov said that the security threat to the Bitcoin network that China represented, would now be even lower than before. The cryptocurrency ecosystem will not become more decentralized than before and it would make it possible for new locations to become crypto hubs.
Other locations offering more environmentally friendly energy sources could also become more prominent over time. In general, we talk about the European market, which is not among the most developed in terms of Bitcoin miners.
El Salvador and Paraguay are also planning to start mining cryptocurrencies with renewable energy sources such as Volcano gas emissions and hydroelectric power, among other things.
Understanding Other Implications
There will be other implications for the market, according to Point Pay analysts. Some of these implications include the following:
- Falling prices of mining equipment and graphic cards
- An improvement on energy efficient solutions
- Lower hash rate (positive for miners in other regions)
- Increased profitability
- Possible new legislation around the world related to Bitcoin mining
- Cryptocurrency value growth in the coming years
- Investments in renewable energy from miners (solar panels)
Experts consider that the recent Chinese mining ban is certainly positive for the cryptocurrency market. Chinese influence is not going to be massively large and miners that were already operating on the network would continue to be profitable.
“Overall, the effects of the Chinese ban on the market are rather positive. Diversifying capacity and developing new locations is good for the market in the long run,” said Mr. Svyatov.