Ever since decentralized currencies came into fruition, they have posed an existential threat to a government's ability to control the purse strings of its citizens -- which is important to prevent illicit activities such as money laundering. In China, this lack of control coupled with the growing rate of crypto-induced bankruptcies led to the swift imposition of sweeping reforms. All trades of legal tender (i.e., Yuan) into cryptocurrencies and vice versa, as well as all Initial Coin Offerings (ICOs) were made illegal. The resultant lack of legal exchanges and ICO activity meant crypto-mining was the last remaining pillar propping up this intangible edifice. Today, China holds around 70 percent of the world's crypto-mining capacity, predominantly due to: easy access to the hardware (i.e., Nvidia processors which are locally manufactured) essential to crypto-mining operations, cheap cost of labor, and crucially, cheap and bountiful energy via massive coal and hydroelectric power plants.
A recent report now suggests that the Chinese government, more specifically the National Development and Reform Commission (NDRC), intends to ban all crypto-mining activity as well. The report lists cryptocurrency mining as one of 450 activities slated for elimination, citing “wasting resources, polluting the environment, being unsafe, or not adhering to law” as the primary reasons, and they wouldn't be wrong on the pollution front -- a study in the journal Nature Sustainability suggests bitcoin alone was set to consume more energy in 2018 than the country of Denmark.
So does this spell disaster for crypto as we know it? Well, not quite, and here's why: (1) China's largest and most visible miners, such as Bitmain's Antpool, will be forced to explore new locations for mining operations specifically where renewable power is cheap and abundant to keep costs low and win favor with the regulatory entities governing these jurisdictions, (2) Mining activity is more likely to become more decentralized and safer, as large Chinese mining pools who dominated the networks, are dismantled into smaller factions, (3) Crypto-miners could use this as an opportunity to pivot into work that is deemed more crucial to the overall success of the ecosystem i.e., blockchain scalability (speed of the network) and interoperability (cross chain information movement) solutions. Such benefits could catalyze adoption rates by addressing the underlying environmental, safety, infrastructural, and centralisation issues that have plagued crypto since its inception. Additionally, a recent survey by Harris Poll for Blockchain Capital suggests, the overall sentiment towards crypto relative to other investable assets is positive with 21% of respondents preferring Bitcoin over government bonds, 17% over stocks, 14% over real estate and 12% would invest in Bitcoin before investing in gold. Finally, although it is still argued whether the NDRC was implying a outright ban or more oversight on mining activity, the resultant benefits fueled by positive market sentiment towards crypto could mean great things to come.