China declared war on cryptocurrency, specifically the most popular crypto - Bitcoin. Did you know that China has the largest Bitcoin mining in the world at a staggering 65%? While the United States accounts only 8% of the mining rigs. The Communist Party of China sees bitcoin as a threat. They banned crypto exchanges in 2017, as well. As we all know Bitcoin is created and moved around not by a central bank or financial institution but by a broad network of computers on what we call Blockchain. Therefore, Bitcoin operates entirely outside of any government control. Not even China's Central Bank.
It allows the people a way to use money completely free from oversight by the government. So if you are a government opposition, the Communist Party can make the bank freeze your savings account. But how about your Bitcoin? Well, they cannot confiscate it, can they?
But contrary to the known facts, the Communist Party is really up to the main reason of saving their environment that is why they are banning Bitcoin. When mining cryptocurrencies, the main requirements are fast computers which will solve complicated mathematical algorithms in the Blockchain. These computers are consuming gigantic amount of electricity with an estimated 130 Terrawatt-hour on a single year! More than the state of California!
This is in relation to President Xi at United Nations assembly telling that China will be carbon neutral within the next 40 years. The fact to the matter is, China is burning the most coal in the entire earth today - all nations combined.
I think the effect of governments banning cryptocurrencies is it will just increase the value of a particular coin - keeping in mind the law of supply and demand.
China has recently pilot-tested their own cryptocurrency - the Digital Yuan which is by the way not a decentralized currency. Of course, it is mainly controlled by the Communist Party. Since China's Renminbi / Yuan is centralized it has all the features of tracking and surveillance embedded into it, which could mean recording every movement of the money anywhere in the world. It can also be used to manipulate an economy thru inflation or deflation.
Few examples of countries that are already rolling out their centralized cryptocurrencies are: Ecuador, China, Senegal, Singapore, and Tunisia.
So, to summarize it up China is banning bitcoin mining for environmental reasons was just a cover story. The real reason why China declared war on Bitcoin is - to ultimately cripple decentralized money and make way for centralized digital currency from their own Central Bank.
Let's keep in mind that centralization is power. See my article about Technocracy Hates Decentralization. Why Is This Alarming? to have in-depth understanding on this matter.