China’s crackdown on Bitcoin mining is good news for crypto miners in North America

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June 28, 2021

Bitcoin erased its 2021 gains last week as China stepped up its crackdown on cryptocurrency mining, a move that should help shift the industry’s center of gravity from Asia to America. North.

Meanwhile, the price of Bitcoin formed a deadly cross last Monday, with the 50-day moving average trading below the 200-day moving average (MA). This technical pattern is often seen as a bearish sign of things to come, but that may not be the case with Bitcoin.

Bitcoin’s death crosses haven’t always been consistent downward price predictors. Take a look at the table below, shared in a Tweet by CoinShares. The digital asset investment firm analyzed Bitcoin price action one, three, six, and 12 months after previous death crossovers, and no pattern has emerged to suggest that a sustained bear market has emerged. triggered when the 50-day AD has fallen below 200 days.

Bitcoin’s death crosses have not been a consistent predictor of declining prices

CoinShares, Bloomberg, USGI

On the contrary, the graph shows that your chances of being rewarded improve the more you hold. A death cross occurred in March 2020, and if you had held it for a year, you could have seen returns as high as 450%, according to CoinShares.

Bitcoin’s price range has widened by a factor of 20 with each new halving cycle

I should also point out that the Bitcoin price range seems to have increased 20 times with each new halving cycle. As a reminder, halving events are built into the Bitcoin network and are designed to control the supply of crypto. Every time 210,000 blocks are mined, which happens about every four years, the reward Bitcoin miners receive is cut in half. Currently, this reward is 6.25 BTC. Previously it was 12.5 BTC, and before that it was 25 BTC. In the next halving, sometime in 2024, a block will only contain 3.125 BTC.

Acquiring a new Bitcoin, in other words, is becoming more and more difficult, just as gold mining has become more difficult over the years as large mineral deposits have become more scarce and more expensive to develop.

During the first cycle, which ended in halving in November 2012, Bitcoin peaked at around $ 30; in the second, which ended in July 2016, it was $ 1,200; and in the third, closed in May 2020, $ 20,000.

We’ve been here for a little over a year in the fourth cycle (check out the CoinMarketCaps timer here), and so far the price of Bitcoins has passed $ 63,000. Could it reach $ 100,000, $ 200,000, $ 500,000? Obviously, past performance is no guarantee of future results, but the calculations suggest incredible upside potential, both in this cycle and in the next (and the next, etc.).

Each Bitcoin halving cycle scale is 20 times larger than the previous cycle

CoinMetrics, USGI Mining Set To Get Easier For Crypto Miners In North America, Thanks To China’s Crackdown

That said, mining is expected to become much easier (and profitable) for North American cryptocurrency miners, thanks to the Chinese government’s aggressive crackdown on the industry. Until recently, China accounted for between 65% and 75% of all Bitcoin mining activity. However, market dominance is expected to shift to North America, after around 90% of China’s Bitcoin mining capacity was ordered to shut down due to concerns about its environmental impact.

Data from Blockchain.com already shows that the global hashrate, a measure of the computing power used per second by the Bitcoin network, has fallen 50% from its peak in mid-April. It is now at its lowest level since November 2020.

This could be very favorable for US and Canadian crypto-miners, including HIVE Blockchain Technologies, who (for now) will no longer have to compete with China for precious blocks.

Big bullish financial players on crypto

Some big players in traditional finance are taking advantage of this period to get into the crypto ecosystem.

Bullish, a new crypto exchange backed by a group of billionaires including PayPal, co-founder of Peter Thiel, is in talks to go public by merging with a Special Purpose Acquisition Company (SPAC). Launched in May, the exchange is an independent affiliate of Block.one, the software company behind the open source blockchain platform EOSIO. The bullish value could reach $ 12 billion, according to Bloomberg.

And then there is Andreessen Horowitz. Also known as a16z, the venture capital firm has launched what is believed to be the largest crypto fund to date, with more than $ 2.2 billion to invest. The mandate of the fund, named Crypto Fund III, is to invest in a wide range of sub-sectors within the ecosystem, including not only digital currencies themselves, but also decentralized finance companies (DeFi). , crypto trading and exchange companies, crypto brokerage companies, privacy and security companies and more.

We are radically optimistic about the potential of cryptos to restore trust and enable new types of governance where communities collectively make important decisions about how networks evolve, permitted behaviors, and the distribution of economic benefits, the team wrote. of the Crypto Fund III.

It’s not just a16z that is radically optimistic. So far this year, investors have invested over $ 8.8 billion in crypto startups and private equity, far exceeding the total amount seen in any other year.

Investors have invested over $ 8.8 billion in crypto startups so far this year, June 2021

The Block Crypto, USGI

It is definitely an exciting time to be an investor in this nascent industry. Some people may worry that it’s too late to start participating, but I think they were still at the end of the first run. And with Bitcoin and Ether well above their peaks, this could now be a very attractive entry point.

Do you know what else could drive crypto prices up? Metcalfes Law! Get the full story by watching the video here.

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Frank Holmes has been appointed non-executive chairman of the board of directors of HIVE Blockchain Technologies. Mr. Holmes and US Global Investors both own shares of HIVE. As of August 31, 2018, Frank Holmes is the Interim Executive Chairman of HIVE. Frank Holmes sits on the board of directors of GoldSpot Discoveries Inc. as independent chairman and held common shares as of March 31, 2019.

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