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2021-10-13

What's next for crypto in China?

Last month, China's central bank, the People's Bank of China (PBoC), released a memo criminalizing virtually all cryptocurrency activity. When the memo began circulating online, the price of Bitcoin ( BTC ) fell more than 6.5%. But soon after, industry experts suggested that the news may have been the ultimate buying opportunity for dips.

 

Chinese attacks on cryptocurrencies began years ago, so much so that bitcoin suffered its biggest dip in difficulty by nearly 28% in July this year as miners began migrating out of China after the government tightened controls on bitcoin mining and trading. The crackdown caused the computing power securing the bitcoin network - its hash rate - to drop by nearly 50%. The latest PBOC memo meant that all remaining mining operations and exchanges had to shut down.

 

Fast forward to October and it seems that bitcoin mining operations are back to normal . According to network analytics provider Glassnode, the BTC hash rate has largely recovered from the collapse caused by the repression in China.

 

The company's "Week On-chain" report explained that both BTC hash rate and mining difficulty, which measures competition between miners securing the network, were on a "consistent path to recovery." The data shows that Bitcoin's hash rate is now close to pre-exodus levels, while maintaining an upward trajectory.