China Crypto Ban Brushed Off as Mining Recovers
The Black Swan events of December may have knocked Bitcoin, the world’s most popular crypto-currency, down 30% in value this month. But, judging from the resilience of the mining activity around the world, which has experienced a full recovery since the Chinese “ban”, the cryptocurrency investment community has further evidence to suggest that digital currencies will continue to rebound from whatever may get thrown at them.
The 'Mecca' of Crypto-Mining
Once upon a time, China was the mecca of cryptocurrency mining with reliable estimates putting the country’s slice of the global crypto-mining pie at the 65% to 75% mark. Then, September 2021 happened. The communist nation with a population of 1.4 billion essentially banned all cryptocurrency transactions, including any mining activity that was happening in the country. The Chinese ban was thought to be the sound of the death knell for digital currencies, but, again, the cryptocurrency market has shown remarkable “comeback” potential.
The recent rebound in global cryptocurrency mining was declared by measuring what’s referred to as the hashrate, a term that’s used to describe the computational power of all the mining activity taking place on the bitcoin network. Specifically, it refers to the amount of computing power per second that the cryptocurrency mining process requires.
Getting back to China, once the ban was announced last summer the cryptocurrency market may have plummeted, but the miners simply folded up their tents, packed their gear, and took their operations to countries that demonstrated a more amiable attitude towards digital currencies. For example, the United States has been a big beneficiary of the Chinese ban – The US is a provider of plentiful, inexpensive electricity and even Kazakstan, where electricity is even less expensive saw a huge migration in cryptocurrency miners.
Cryptocurrency mining has certainly received its fair share of press, especially now that the effects of the Chinese ban have been eclipsed by the market’s recent global mining activity, so it’s worth taking a moment to understand what cryptocurrency mining really is.
What is cryptocurrency mining?
Most of society believes the cryptocurrency mining process is just a way of creating new coins. That’s true, but there’s more involved. Crypto mining is deemed successful once miners have validated cryptocurrency transactions on a blockchain network and then successfully add them to a distributed ledger. Most importantly, the mining process prevents the “double-spending” of digital currency. In the most basic sense, cryptocurrency mining is the process of solving very complicated mathematical puzzles. If you can solve them fast enough, you’re rewarded with a coin. However, cryptocurrency miners that solve these puzzles slower than their competition don’t. It’s a process called “proof of work.”
The most remarkable thing about this story is that a global superpower instituted a countrywide ban of cryptocurrency transactions, and less than six months later the cryptocurrency market is making a “chest thumping” statement with a full recovery.
Author: Greyson Kelly
Greyson Kelly is a business writer living in Milwaukee, Wisconsin. He writes extensively on technological trends, cryptocurrency, and ‘cutting edge’ industry topics. He has an MBA in Business and has over a decade of experience in communications and public relations.