Once the bitcoin mining center of the world, China is increasing its efforts to regulate and outright ban crypto mining. Recently, China has announced that it will ban crypto transactions, leading to a big wave of panic on the markets with bitcoin (BTC) correcting heavily. The effects of China’s actions are now also visible in other parts of the crypto economy.
While the bitcoin and overall crypto prices seem to recover in the past couple of days, it is becoming increasingly clear what effects China’s new ban has—starting with some mining-related news. As mentioned, China was once the absolute epicenter of crypto mining. It was the home of several big mining pools, such as Spark Pool, the second-largest mining pool of the Ethereum network.
On its website, Spark Pool announced that it would stop all its services, meaning the whole mining pool will be taken offline: “We regret to announce that we will stop all our services at 12:00 UTC on the 30th of September, 2021,” as can be read in a big orange banner on the website. Spark Pool generates about 20% of Ethereum’s total hash rate.
And Spark Pool isn’t the only one taking this step. BeePool, Ethereum’s fourth-largest Ethereum mining pool, will cease operations on the 15th of October. Together with Spark Pool, the mining pools generate about a quarter of Ethereum’s mining power.
Lastly, Alibaba will no longer sell crypto miners via its platform. In an announcement, Alibaba wrote:
“After a thorough evaluation, taking into account the instability of laws and regulations on virtual currencies and relevant products in various international markets, Alibaba.com will prohibit the sale of virtual currency miners in addition to the prohibition against selling virtual currencies such as Bitcoin, Litecoin, BeaoCoin, QuarkCoin, and Ethereum.”
The developments described above are significant. As the two big mining pools will go offline soon, the hash rate of Ethereum will likely decrease. Bitcoin may face a similar fate, although many Chinese BTC miners already left the country due to the earlier mining ban.
For miners outside of China, this creates an exciting opportunity. China dominated mining for a long time, but the decreasing hash rates mean it will become easier to mine for other miners. In other words, the entry barrier will become lower, and thus it will become easier for beginners to start mining! We will surely keep a close eye on the developments in the coming months.