Why crypto de-chinafication is good – China crypto news
On today’s Money Morning… here’s the latest news from China… New Game is gathering strength: China is serious about cracking down on crypto…
Editor’s Note: In the last episode of The Morning Money Podcast, I sit down to chat with Stewart Dickson about Variscan Mines Ltd. [ASX:VAR], which recently climbed the charts on promising grades from its mine in the Basque Country, in northern Spain. We talk about the essential role of zinc in the global economy and the prospect of a stimulating commodities boom.
Yesterday I wrote to you about some big crypto moves over the past few days, and today continues on the same theme.
You see, China is extremely serious about expelling crypto from the country.
That’s a good thing – a clear long-term positive, despite the short-term disruption and pain.
You can see this pain manifesting itself on the graph for Bitcoin [BTC] at the moment (last five trading days):
The price of bitcoin broke through the significant support lines of $ 33,000 and $ 30,000, even going as high as $ 29,000 briefly before some buying took place.
Here is the latest news from China …
New Game gathers strength: China takes crypto crackdown seriously
We’ve talked a lot about the “new game” here at Silver morning – which is the idea that the concept of money is changing rapidly and requires the attention of investors.
But even we are surprised at how quickly things are moving in a competitive “techno-monetary” landscape.
And now Chinese banks are implementing transaction monitoring processes, * cough *, I mean ‘due diligence’.
According to an excellent CoinDesk article by David Z Morris:
‘The Agricultural Bank of China, for example, announced Monday that it will implement a due diligence process to spot cryptocurrency-related transactions. Detection of such activity, AgBank said, could result in account suspension.
‘It’s important to note that this scrutiny would likely focus as much or more on individuals as it does on cryptocurrency firms. That’s because these companies are thin on the ground in China: most notably, cryptocurrency trading was banned in the country in 2017, leading to the shutdown of domestic operations by people like Bobby Lee’s BTCC.‘
Which is accompanied by an exodus of BTC miners from Chinese borders:
‘By now it should be clear that the “hashrate migration” is real: miners are leaving China for good. As of April 2020, around 65% of bitcoin’s hashrate was domiciled in China; with bans confirmed across the country, that figure will be much lower in 12 months. The exact extent and timing of the westward move is currently unknown, but all signals seem to point to the biggest upheaval in the geographic makeup of bitcoin mining since the start of the industrial mining era.‘
China has long dominated mining, which is reflected in figures from the Center for Alternative Finance at the University of Cambridge dating back to 2019:
But the Cambridge University map of bitcoin hash rate growth (BTC mining power) is particularly interesting because it shows that the United States is absorbing some of the hash rate exodus from China in the past. over time.
The United States has nearly doubled its share of mining power over the past two years.
This trend is expected to continue in a country which, despite its best efforts, remains relatively “free”.
Conclusion, the hash rate exodus from China is a good thing as new miners will appear in more crypto-friendly jurisdictions, further distributing and democratizing bitcoin mining.
A more competitive structure, a more robust structure and ultimately a net positive for the crypto world.
Which brings me to a really intriguing proposition …
New money is energy and energy is money
Recalling that Mr. Musk’s main criticism of BTC was that it is powered by dirty energy, it will be very interesting to see how the renewable energy revolution collides with crypto, which to in turn will collide with massive geopolitical changes around new money.
Philip Coggan who writes for The Economist said the following:
‘Modern money is debt and debt is money.‘
Let’s return the script:
Adding it all up, if we can mine bitcoin or any other crypto in an efficient way …
The last major criticism of the crypto movement will be left out.
The only remaining criticism will be “Well, this will displace a whole industry of workers.” “
These are the regulators, the middlemen, the brokerage houses, the hedge funds and the “you name it” types of combinations.
Just like the Luddits and their destruction of textile machinery, do we really need these jobs? How many kids when they grow up say, “Mom, I want to be a Big Four bank judicial auditor?”
I was going out on the smallest of the limbs and I was saying no one. And if they did, that would be a child to be seriously worried about.
So if you’re worried about being a Luddite or want to start trading crypto, be sure to watch Ryan Dinse’s latest talk on his crypto trading strategy here.
This will open your eyes to the opportunities available and give you some helpful advice on how to get started.
For Morning money
PS: Lachlann is also an editorial analyst at Exponential equity investor, a stock newsletter that searches for promising small-cap stocks. For more information on how to subscribe and see what Lachy is saying to subscribers right now, please click here.