China vs. Crypto: What are the Benefits?

As we all know, the cryptocurrency journey is volatile and a true rollercoaster ride – and this even more so for Chinese investors who have experienced being banned from any cryptocurrency-related activities. But why is China tightening the current crackdown? And how does it affect the crypto world outside China?

In the first place, China has never been into cryptocurrency. Way back in 2013, the Central Bank of China banned financial institutions from any Bitcoin transactions and activities, such as mining; in 2017, the number of illegal financing activities was much further-reaching, and it included criminal groups using cryptocurrencies for money laundering purposes. This is the reason why now, in 2021, they have to strengthen the crackdown, in order to avoid any effects on China’s digital economy.

From a recently reported crackdown, the Sichuan Province in southwest China is known as the ‘major Bitcoin mining hub’ due to its abundant water resources that can be turned into hydroelectricity; which can make a great contribution towards promoting renewable resources. But, China has banned everything related to crypto, including hydro-powered, coal and fossil-fuel energy to power Bitcoin mining rigs.

Benefits of the Crackdown to China and Other Parts of the World

China’s crackdown simply protects the country and its citizens from any disadvantage and danger that may result from the use of cryptocurrency. Billionaires and influencers can (to some extent) control the direction in which market trends move, just like Tesla CEO Elon Musk did after announcing they are not going to accept BTC anymore, due to some environmental concerns. What actually happened to Bitcoin after that? The price dropped over $30,000 for the first time this year, as a result of the news following the crackdown.

Since crypto mining has been banned in China, mining firms have to find ways to continue their operations elsewhere. Canaan, a Beijing-based mining giant, has set up its headquarters in Kazakhstan, which is famous for its low electricity rates. Kazakhstan also turned out to be the fourth largest in the world, in terms of hashrate distribution, after Russia (3rd), the US (2nd) and China in first place. It is also said that crypto mining firms in North America will feel the mining growth and may receive higher gross profits, as a result of China’s crackdown.

Behind the banning and crackdowns, the People’s Bank of China is cooking up something good for Chinese citizens, namely is the e-CNY, also called the “Digital Yuan”, which will support CBDC. Even outside the country, the digital yuan seems to be catching the eye of some billionaires and analysts, and they envision it as the next global currency, due to its authentic features and great innovation in this fast-moving tech world.