Why China’s crackdown on mining is actually good for Bitcoin
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Why China’s crackdown on mining is actually good for Bitcoin

Bitcoin mining is a costly process that requires high-powered computers. China’s crackdown on the industry has driven up costs and made Bitcoin less profitable for miners, which may have unintended consequences for cryptocurrency as a whole.

China’s crackdown on Bitcoin mining is actually good for the cryptocurrency. China has banned Bitcoin mining in an attempt to combat capital flight and money laundering. This is a step in the right direction, as it will help protect their economy from the risks of cryptocurrencies. Read more in detail here: why did china ban bitcoin mining.

The ban on Proof-of-Work mining in China last year put the Bitcoin network’s security to the test and revealed that it was far more robust than previously anticipated.

Analysts predicted that it would take more than a year for the Bitcoin network to recover, yet it did so in less than a month.

Bitcoin is now more resilient than ever thanks to the Chinese mining prohibition.

The biggest blow to the Bitcoin network came in May of last year, when many Chinese regions started enforcing laws meant to stop Proof-of-Stake mining. The rules were successful in driving practically all Bitcoin mining operations and the majority of crypto firms out of the nation, citing environmental concerns and energy-producing thresholds.

The prohibitions sparked fear in the market since more than 75% of Bitcoin mining takes place in China, and many people thought that if they were to be put into effect, the network would suffer a fatal blow.

The network suffered a significant setback—losing more than 40% of its hash rate between May and July 2021—but it recovered more quickly than anybody anticipated.

The hash rate of bitcoin (30-day MA) (Refer to Fidelity)

Given that all of China’s enormous mining operations had to be packed up and relocated, many observers predicted that it would take well over a year for the hash rate to return to its prior highs. Those who didn’t move were anticipated to sell off their equipment, which would put extra strain on the network.

However, the network quickly recovered and maintained the upward trend into 2021. The 30-day hash rate was 5% higher than the year’s previous record in December of last year.

Fidelity Investments stated that China’s ban on Bitcoin eliminated a significant operational and investment risk for the network—the possibility of a nation-state attack—in its 2021 Digital Asset Recap.

“Because up to 75% of the network’s computing power was previously situated in China, we believe there was a genuine danger of China seizing control of the bulk of this capacity and the ability to capture over 50% of the network’s power,” said Fidelity in the study.

Although there was no indication that China intended for this to happen, the fact that all mining activities have left the nation indicates that it won’t in the future.

This is because the Chinese government’s prohibition has forced miners to disperse their operations around the globe, further decentralizing Bitcoin’s hash rate.

Last but not least, Fidelity believes that the huge exodus of miners will have a significant beneficial influence on Bitcoin. The fact that such a broad-scale move of significant mining operations overseas has been made indicates that the miners are investing for the long term rather than just searching for a fast return.

And this is what has strengthened and will continue to increase the Bitcoin network’s robustness and dependability, according to Fidelity.


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The “best chinese cryptocurrency 2021” is a great article that talks about the recent news of China’s crackdown on mining. It talks about how this will actually be good for Bitcoin.

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