Three Months After the China Ban, Bitcoin Shines Brightly While Being Rid of Its Biggest Handicap
By: Sylvain Saurel
Tags: Cryptocurrency, Bitcoin Mining, Finance, Bitcoin, Investing

Three Months After the China Ban, Bitcoin Shines Brightly While Being Rid of Its Biggest Handicap

Image: Adobe Stock

A little over three months ago, China announced a ban on bitcoin, including the mining industry, which was then banned by several provinces in the country led by Xi Jinping.

China justified its decision by the dangers of Bitcoin’s price volatility, but also by the environmental impact of Bitcoin with a carbon footprint that could reach 130 million metric tons of carbon by 2024. This estimated figure could then represent 5.4% of carbon emissions from generating electricity in the country.

Panic began to take hold of the Bitcoin market, which was fanned by Elon Musk’s tweets, whose interest was obvious: to manipulate the price of Bitcoin to his advantage.

China’s ban on Bitcoin has triggered great fear among investors with a short-term view

Elon Musk chose the worst possible moment to announce the end of Tesla’s support for Bitcoin payments amidst concerns about the environmental impact of Bitcoin. Yet, by the beginning of 2021, the impact of Bitcoin was the same when he pushed Tesla to buy well over $1 billion worth of BTC.

In the aftermath, Elon Musk explained that he continued to have confidence in Bitcoin, but that Tesla would only support Bitcoin payments again when the share of renewable energy in the electricity used by the Bitcoin network exceeded 50%.

Such requirements seemed quite huge when compared to the world’s leading economies, which don’t even manage to reach 20%.

The price of Bitcoin then crashed, plunging from $50K to $29K in a matter of weeks. Many spoke of a Bear Market. Some even said that Bitcoin would never recover from China’s ban on mining, which caused the Bitcoin Hash Rate to plummet.

At the time, many were short-sighted. I explained then that China’s ban on Bitcoin mining was something Bullish for Bitcoin.

China’s ban was the best thing that could happen to Bitcoin

Some people asked me why I was so optimistic. My answer was clear: it would rid Bitcoin of its biggest handicap.

That biggest handicap was the excessive concentration of Bitcoin’s hash power in China. This was an argument that had been used constantly against Bitcoin for years. It also hurt Bitcoin’s ESG score. China’s ban quickly caused a large exodus of Bitcoin mining to the West.

Kazakhstan has also captured some of the mining companies’ equipment and is emerging as a future powerhouse. Nevertheless, the future leading area in the world for Bitcoin mining will be North America.

This is great news, as the ever-growing companies in America and Canada make green mining a priority. At the end of June 2021, the Bitcoin Mining Council published its figures: the share of electricity from renewable energy sources for the Bitcoin network exceeded 50% and reached 56%. The ESG score of Bitcoin is already very high.

Elon Musk was expected to react, but he did not. The Tesla boss preferred to continue supporting Dogecoin, which he seems to want to make the replacement of Bitcoin thanks to his support alone. Pure egocentrism in my opinion. The problem is that he is going to make losing a lot of money to thousands of investors who blindly follow him.

Bitcoin is now free of the handicap of having its hash power concentrated in China

Over the summer it became clear that the Bitcoin Bull Market was not over. We were at the beginning of the second bullish wave. Various reasons have allowed Bitcoin since the beginning of August 2021 to rise again to see its price exceed $50K again by the end of the month.

We are now back to the same price that Bitcoin was at on May 14, 2021, with one major difference: we are now free of China’s domination of Bitcoin mining.

The Bitcoin Hash Rate has rebounded strongly and the Bitcoin system remains the most secure decentralized network in the world. The best is yet to come for Bitcoin. The big lesson from all of this is that when something that looks negative in the short term happens, you have to make the effort to take a medium to long-term view.

With Bitcoin, this is the key to taking full advantage of its revolution.