Today, China has reaffirmed its position to outlaw all cryptocurrencies in its economy clamping down on all related economic activity. This includes cryptocurrency miners and platforms based in China that have taken advantage of the cheap manufacturing of computer hardware and software. This decision has been made in large part due to the environmental ramifications that cryptocurrency creates. For mining in particular, it is very energy intensive to not only power the computer equipment but to also run systems critical to the cooling necessary for these computers to run nonstop. The heavy reliance on cheap electricity causes a high demand for sources that produce a lot of pollution like natural gas and coal power plants. The growth of this industry in China runs in the opposite direction of the country’s goals to fix its international reputation as the world’s largest polluter. China has set a handful of monumental goals to reduce its pollution levels and cryptocurrency could be a factor in achieving those milestones.
While today’s statement from China echoes previous messages reflecting their unflinching position, it does not change how impactful this decision will be on the future of cryptocurrency worldwide. China has a huge market that can help fuel the growth of cryptocurrencies and further legitimize the new technology. Without this market, growth will be slowed as other regions in the world develop their own cryptocurrency sectors. However, the absence of a major player in the market can open up many opportunities for others to capitalize on. Miners and platforms in other parts of the world can take more market share with less competition. Also, governments can take the lead over China to make themselves economic leaders in this budding market.
Overall, China is taking a more different approach to cryptocurrency than most of the world. But time will tell if China’s aggressive market involvement will pay off.
Credit
https://www.cnn.com/2021/09/24/investing/china-cryptocurrency-ban/index.html
4 comments:
I think it is a good decision from China to ban cryptocurrency, even if it is for the moment. I read that even the Indian government is potentially going to implement a similar ban on crypto, for the very same reasons, however, India's crypto market is not as vast as China's. But it is a monumental step towards a greener future. I believe that the energy and time spent in mining crypto is not worth the marginal monetary benefits from doing that activity. Moreover, many companies conducting crypto mining on very large scales disregard the ecological impacts and do not have any sustainable development goals like some of the Big Tech is doing right now, which is very detrimental to the UN's goals of a sustainable future of the planet.
Cryptocurrency is a new era of payment. Avoiding fees that institutes can charge, lack of being tracked. Even though there are many advantages of cryptocurrency, there is the other side of the coin. Due to mining, the world faced a shortage of computer parts. Some of them became four times more expensive. Moreover, it requires an enormous amount of electricity, which causes more spending on electricity for some cities in the United States. Mostly, people who mine cryptocurrency mine them illegally. China made a mind-blowing step in their cryptocurrency industry. It shocks when countries such as China can make cryptocurrency illegal, but they made a big impact for crypto to become a big currency in the world. Bitcoin has been down almost 9% percent last week. It might face further fall in the price, due to loss of a big player as China
I liked your wordplay when regarding China's "aggressive market involvement" and "economic leadership". This market is very new and nations have been very hands off so far. China taking such a strong side on crypto could very well affect other countries with their acceptance of these new payment methods.
The decision by China could be a very monumental step in our history as cryptocurrency is one of the latest advancements we have made as humans for the monetary sector. Cryptocurrency provides unparalleled privacy and security as the government has no control over it and transactions are end to end secured. Furthermore, it promotes the ideology of a cashless society and produces a different monetary school of thought than the previous one. China banning such an economically strong and powerful tool seems surprising at first. A country that aims to economically dominate the entire planet and is an epicenter of technology and advancement, China would definitely want to claim dominance in a system that could be the currency of the future. However,
their choice to ban it due to pollution and energy conservation does make some sense as China is facing worldwide criticism for pollution and wastage of energy. Handling its image in the world is extremely crucial to China as its other industries highly depend on it and the country's economy depends on the work outsourced to it.
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