Why China's Ban on Cryptocurrency and Mining Was the Best Thing for Bitcoin in 2021

The ban on Bitcoin activity in China generated negative headlines in 2021, but it was the best thing that could happen last year.

When the Chinese Bitcoin crackdown took effect, many speculated that the industry would never recover, but this ban highlighted both the sector's resilience and the entrepreneurship of miners who keep supporting the blockchain.

Although the People’s Bank of China (PBOC) deemed crypto-related activities illegal in September, Bitcoin enjoyed a remarkable year in 2021, breaking its previous all-time high.

The Great Mining Migration:

In what has been termed the Great Mining Migration, miners based in provinces such as Xinjiang, Inner Mongolia, Sichuan and Yunnan have stopped mining and are heading to new centers in neighboring countries such as Kazakhstan, Russia and North America.

Meanwhile, the hash rate fell by as much as 50% before rebounding impressively.

There are certainly many reasons why Bitcoin is banned in China. Not only are lawmakers worried about the volatility of assets, but they, like many governments around the world, are troubled by their inability to influence it. Plus, the nature of energy intensity Bitcoin mining — about 40% of Chinese bitcoin miners by some estimates run on coal — threatens Beijing’s commitment to reach carbon neutrality by 2060.

It takes a genius to realize that CCP has been putting a huge spotlight on its state-backed digital currency.

According to experts, the People's Bank of China (PBOC) is likely to be the first to launch a fully-fledged central bank digital currency (CBDC).

Subsequent events after China announced the ban:

Bitcoin has reached a new all-time high of over $68,000.

The first BTC futures-traded fund (ETF) launched in the US, allowing investors to buy and sell exposure to the asset off exchanges.

The United States has become the dominant mining center in the world.