After China’s announcement that it would stop Bitcoin mining activities, a new decrease of around 10% occurred in Bitcoin prices, which were already in a downtrend.
China’s cessation of Bitcoin mining activities bad news?
The decision taken by the China State Council Committee on Stability and Development announced that Bitcoin mining and trading activities will be stopped. Emphasis was placed on preventing financial risks in taking the said decision.. After this decision, there was a new wave of decline in Bitcoin prices and the pair temporarily declined to the level of 30 thousand dollars.
We see the daily change in Bitcoin prices in the chart below.
Bitcoin transfers and trading transactions are recorded on the Bitcoin network by Bitcoin miners, thanks to various hardware. Bitcoin mining operations, which require very high energy and operating power, are carried out in distributed mining centers.. Miners receive Bitcoin rewards for these services. An average of 900 Bitcoins are distributed daily to miners as rewards.
Bitcoin mining industry is open to all to promote decentralization and democracy within the network.. However, formations with high hardware capacity can get more shares from the daily distributed Bitcoin rewards by creating a monopoly thanks to the high hash power.. So you can start mining Bitcoin by purchasing an Antminer brand Bitcoin mining hardware.. However, you will be less competitive against large mining pools and you will be rewarded with a lower amount of BTC.. It is noteworthy that 55%-60% of mining pools are concentrated in China.
The Chinese monopoly in Bitcoin mining has started to pose a risk to the Bitcoin ecosystem.. The Chinese government’s decision to ban Bitcoin mining can actually be seen as a positive development for Bitcoin in the long run.
Please See: What actually contributed to the decline in Bitcoin prices?
At the beginning of the main factors that make Bitcoin valuable; The reason lies in the fact that its supply is limited to 21 million units and the Bitcoin network is decentralized.. However, the concentration of Bitcoin mining in China over time began to damage the decentralized structure of Bitcoin.. A group of Chinese miner pools can come together to manipulate Bitcoin prices. This risk, called 51 attack, has increased due to the Chinese miner monopoly.
If the miners controlling the Bitcoin hash power can reach 51% hash power, they can manipulate Bitcoin addresses.. They can forward the transferred BTCs to their own address using the “double spend” method. For this reason, China’s ban on Bitcoin mining eliminates the risk of 51 attacks and double spending in the future. >Source