Despite the cryptocurrency ban, China still controls a significant part of the world's Bitcoin hashrate. Discussions about potential regulatory changes are underway that could alter this situation.
The Cryptocurrency Ban in China and Mining Pool Influence
The Chinese government banned cryptocurrency in 2021 to reduce financial risks and control money flow. However, mining pools in the country continue to exert significant influence over the Bitcoin network. According to CryptoQuant's Ki Young Ju, these pools account for approximately 55% of the global Bitcoin hashrate, while U.S.-based companies represent around 40%.
Potential Regulatory Changes for Cryptocurrencies
Recently, there has been speculation about a potential shift in the regulatory landscape in Mainland China. The government is increasingly interested in blockchain technology, raising hopes for a more favorable regulatory framework for cryptocurrencies. Hong Kong, a semi-autonomous region of China, has already adopted a more crypto-friendly stance, which may influence the mainland's future policies.
Impact of Changes on China's Bitcoin Hashrate
If the regulations indeed become more favorable, it could encourage former and new miners to return to the country. Before the 2021 ban, China was a global hub for Bitcoin mining due to its cheap electricity and extensive infrastructure. Easing regulations could once again make it an attractive location for miners, potentially boosting its share of the Bitcoin hashrate.
It is suggested that global competition might compel China to reconsider its stance on cryptocurrencies. The country may seek ways to integrate digital currencies into its financial framework while maintaining control over critical market areas.