The United States is the new crypto mining capital after China’s ban

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China ended a cryptocurrency boom that lasted for nearly a decade by banning Bitcoin and all crypto-related transactions, bringing down virtual currency and putting the United States in a position to dominate the world. crypto market.

The government “will resolutely crack down on speculation in virtual currency … to protect people’s property and maintain economic, financial and social order,” the People’s Bank of China said in a statement.

The bank said in announcing the ban that cryptocurrency “leads to criminal activity, including money laundering, illegal fundraising, fraud and pyramid schemes.”

The government’s move comes after years of crackdowns by Chinese regulators on the cryptocurrency industry. In 2013, the People’s Bank of China banned banks from processing bitcoin transactions, calling the cryptocurrency a “special virtual product.” The national bank halted local crypto trading in 2017, leading to an increase in overseas trade using virtual private networks (VPNs) to transact.

Customers walk past a newly installed Robocoin ATM that accepts Bitcoin at D Las Vegas on May 24, 2014, in Las Vegas, Nevada. The machine, the first Bitcoin ATM ever to be placed in a casino, allows customers to exchange Bitcoin for cash and vice versa. (Ethan Miller / Getty Images)

The ban includes transactions based outside of China, meaning Chinese citizens can no longer bypass government controls on foreign transactions by trading cryptocurrencies abroad.

“Maybe a decade ago, China was really open to cryptocurrency. They invited cryptocurrency companies and said, “Hey, there is a lot of energy available, a lot of coal-fired power plants available, the energy is cheap, come and set up your mining operations here” “, Ian Khan , director of the documentary “Bitcoin Dilemma”, says Zenger.

Mainland China held 75% of the global hashrate (a measure of the computing power used to mine the cryptocurrency) as of September 2019. By July 2021, China’s share had fallen to zero.

“What China has done in recent years is that it has started experimenting with a digital form of its own currency to convert its own currency, the yuan,” Khan said.

China began testing a state-backed digital version of the yuan called electronic payment in digital currency in April. It does not require an internet connection to complete transactions, is similar to Apple Pay, and should be used as the primary payment method.

The United States now holds 35% of the global hashrate, which is sure to increase as cryptomining’s heavy use of electricity indicates that the US states with the lowest electricity prices are the most attractive. for minors looking to settle.

Bitcoin mining hardware is displayed at a Bitcoin conference at the Javits Center on April 7, 2014, in New York City. Topics included markets for trading bitcoin, mining hardware for harvesting bitcoin, and digital wallets for storing bitcoin. (Andrew Burton / Getty Images)

States with open spaces and a deregulated energy grid, like Texas, could become the prime candidates for cryptocurrency miners leaving China.

“It’s a real boost for the United States in a number of ways. One is that much of the cryptomining that used to happen in China is now taking place in the United States. And that means the new crypto generated from the mining process will be generated in the United States, ”Martin Chorzempa, senior researcher at the Peterson Institute for International Economics, told Zenger.

“And that means the United States is going to be the source of liquidity for the cryptocurrency space like China was before. And to the extent that these Bitcoin mines are profitable, creating jobs, it could be something very useful. “

A banner for the newly listed Bitcoin ProShares Strategy ETF hangs outside the New York Stock Exchange on October 19, 2021, in New York City. Trading under the symbol BITO, it is the first Bitcoin-linked exchange-traded fund in the United States (Spencer Platt / Getty Images)

Although Bitcoin recorded its highest prices this week, the popularity of virtual currency has a dark underbelly. Cryptocurrency is decentralized through blockchain technology, which records every digital transaction made in a public forum. However, the blockchain allows transactions to be carried out anonymously, as it only records a wallet identity. The anonymity of the cryptocurrency has made it ideal for use on the black market.

“I think what China is doing is dangerous because it is forcing people to go this route instead of creating a clear regulatory regime. … Now you’re forcing people into the black market, which will only make crypto worse, and that’s going to force another type of person to do it, ”Jordan Fried, CEO of Immutable Holdings, a blockchain holding company, Zenger said.

“I am very against the Chinese ban. But I think it presents a very interesting opportunity for the United States, ”he said.

Edited by Richard Pretorius and Kristen Butler

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