China Planning to Push Away Mining Companies and Reduce BTC Mining
Being the leader of the crypto-ecosystem – Bitcoin is very famous, and specifically in China where like new innovations and technology do find their right adoption place quite fast, Bitcoin is doing so too. Proportionally with the trading, there is a lot of BTC mining going on in the country where bitcoin mining companies are spreading out. However, the GOV of China could be drafting plans to send them away from the country.
For starters, the process of mining is done by powerful computers that are brought together with the sole purpose of solving complicated algorithms and math problems in that way that new so-called blocks are formed and found in the specific blockchain. As the work is done, it will conclude with a payout for the one who is doing it.
Bitcoin mining is very expensive for a few reasons. First, it uses a lot of energy. The electricity consumption of cryptocurrency mining has been discussed over and over again, especially by environmentalists who claim that the technology is costing the planet too much. As the world becomes more and more affected by pollution and global warming, it is essential to rethink our economy and our society in a greener way. This is why bitcoin mining is bothering a lot of activists. Another issue with mining are the costs. It is extremely expensive to mine, as it requires costly equipment ($3,000 and up) and electricity costs are very high. In addition, storage space and cooling equipment have to be taken into account. Lastly, the rewards are decreasing over time as the mining difficulty is going up. Therefore, it is becoming less and less profitable to mine bitcoin. In the beginning, it was possible for an individual to mine bitcoin on his own computer, and obtain good returns. Nowadays, it requires ASICs mining rigs and is usually not very profitable.
The power usage and Electricity is why China is attempting to distance itself from the mining companies. The above mentioned firms did make their way to China because of the low costs in electricity, cheap labor and cheap chip manufacturing firms. Keeping in mind that the consumption is to high, individuals form the gov stated:
“to limit the industry’s power use and have asked local governments to guide miners toward an “orderly” exit from the business”
This is a movement that arrives 4 years after the country did try to ban bitcoin in 2013 which did have an impact on the price significantly.
What will be the future of bitcoin mining? With block mining rewards set to halve in 2020 and governments across the world wishing to reduce energy consumption, it will be interesting to see what this means for mining, but most importantly for the cryptocurrency industry as a whole.