China’s influence on the global Bitcoin economy was one of the biggest on crypto market in 2017. Since People’s Republic was the reign of mining and trading, many things have changed about the regulation and the China’s influence wasn’t the same.
China’s influence on Mining operations
China has registered a high percentage of Bitcoin miners (almost 70%) of the Bitcoin network. Even in the right moment, China is one of the most influential in mining because electricity in China is not expansive.
China has a big supply of electricity due to dams and coal-based facilities. The plan is to construct even more in the next decade. In the country there is so many energies that remain unused.
The mechanism that utilizes Bitcoin network is very energy-consumer due to difficulty of mining. For Bitcoin mining, the total costs of energy sum up around 60 percent.
An important factor that determines if mining is profitable is the cheap electricity. That’s why China is using cheap electricity, to earn more than 12.5 new bitcoins with each block.
The Chinese company of mining Bitmain is one of the biggest in the world. Bitmain is headquartered in Beijing though it has offices around the world.
The regulators begun to interdict the Bitcoin mining in the country. The People’s Bank of China (PBOC), the central bank, try to control Bitcoin mining through the track of the amount of electricity available for miners.
Bitmain company related that they tend to move to other countries where the electricity is cheaper, but the regulations are more flexible. That’s why Bitmain opened a subsidiary in Switzerland to continue with its operations.
Bitcoin trading
In the 2017, China has banned more exchanges of Bitcoin and other cryptocurrencies. It is unknows why Beijing took the decision of regulations, but the main result is to have greater control about Yuan.
Chinese citizens were continuing to trade with international exchanges and the directive didn’t have the right result. The directive then expanded and blocked all the exchanges of Bitcoin in the country.
Because China was one of the most important in the crypto market, the regulations influenced the price of Bitcoin.
How does this affect China’s global position?
The acquisition of Bitcoin and the storage of it gave Chinese citizens the opportunity to have a currency free from government control. Bitcoin mining was an extra income for the people but, once the regulations begun, cryptocurrency market is decreasing.
Most of the people still have the hope that government will take out the ban. BTCC’s co-founder Bobby Lee has expressed his belief that the regulatory climate will change saying: “One day I think it’s possible they’ll lift the ban […] and they might reinstitute it and license it.”