As China became one of the leaders in cryptocurrency mining, this raised some serious issues for the Chinese authorities.
The growth in cryptocurrency miners is expected to reach its peak in 2024. However, even now only miners are consuming a lot of energy, which is approximated to reach 297 terawatt-hours, which is equal to whole energy consumption in some of the most developed countries of Europe. This was a signal for Chinese authorities to put the crackdown on crypto mining since it is using too much energy for its work.
Cause and effects
Due to all this previously mentioned, we assume that the cause and effects of these actions by Chinese authorities are:
Chinese government led by their president Xi Jinping announced that they will be carbon neutral by 2060. To reach this goal they need to reduce their energy consumption, and as crypto mining is one of the major consumers, they have decided to cut it down.
The effects of these actions are the plummet of the crypto market. In the last few days Bitcoin, as well as a lot of other cryptocurrencies had major fall in value, due to Chinese share in this market. As the mining has been stopped by one of the biggest players in this game, this market has record falls. For example, BitCoin is now 50% of its record value. With all of this, even Federal Reserves announced that they will start with greater global financial regulations on this matter.
As everything has been said, the market and the whole Chinese crackdown situation should be observed carefully. For the investor, it is pretty uncertain for the new investments in cryptocurrencies. Since the market had a huge breakdown, not to mention “the crypto winter“ that is predicted by many experts at the end of the year. If you want to find out more about this matter, you can check here.