The Bitcoin Halving will be a very tough period for Bitcoin miners around the world. We are not trying to sell fear here, but it’s expected that hash power will drop significantly especially in the first 7-10 days after the Halving.
The reason for this is the rapid increase in difficulty, which will cause miners to either shut down their miners or switch to another cryptocurrency. Naturally, there are many powerful miners that control significant amounts of hash power that will decide to stay and mine BTC. They will get richer if they can avoid selling in the short run.
Out of everybody on the globe, China has the best position to massively outperform the rest of the world because of these five reasons:
Breaking away with the speculation
Some people believe crypto is not legal in China. That miner and crypto users are both being banned from creating new coins, that operating mining farms is somehow limited by Chinese law. This is as far from the truth as possible in regards to mining.
Miners have two requirements to fulfil with their local government in China:
- Register as a mining business
- Pay taxes to the internal revenue system
Other than that, it’s free-range and legal for miners to operate their business. We are looking to confirm our suspicions by carefully tracking the hash power distribution in the upcoming weeks to see who takes the biggest piece of the pie for the “death week” following the Halving.
Raining season will hit China, increasing levels of water flow. This means hydro plants will have an easier time creating even cheaper electricity. Last year’s average cost was $0.035 per kWh, in the Sichuan and Yunnan provinces. This year’s cheap electricity for Chinese miners will put a strain on miners outside of China, intensifying the competitive market even further.
Positive government attitude
Xi Jinping last September’s major pro-blockchain statement motivated the entire country to pursue blockchain. With the establishment of the BSN network and the incentive plan to provide tools for developers. Simultaneously this provides another layer of support for cryptocurrency miners in the country.
They are not only using electricity for their own gains, but they are also improving the Chinese economy through their activities. As mentioned before, miners are now considered legitimate businesses, which is a huge relief in itself. It does hurt the individual miner’s bottom line, but as a community, the Chinese miners probably have the best opportunity in the world right now.
New equipment, no premium
Sources indicate that new mining equipment expected on the market (Whatsminer M30S and Antminer S19) is currently only available in China. Logistical issues and high shipping costs prevent miners from the rest of the world to have financially viable access to new Chinese Bitcoin miners. The Chinese miner doesn’t have to pay a premium to upgrade his farm, and can simply reinvest into growth.
Combined with the record-low electricity costs for the following period of the year, China is the major ingredient in a recipe for success.
Corona is helping miners in China
While the rest of the world is busy fighting off the pandemic, things have stabilized in China. The number of infected has been steadily sitting on ~81k for almost the entire month. Combined with the mining manufacturers present in the mainland, Chinese miners are experiencing logistical luxury. They have the cheapest access price to mining equipment, as well as a direct relationship with Bitcoin miner manufacturers.
Do you agree?
Will China be the winner of the #Bitcoin halving?
— hashpowah (@hashpowah) April 23, 2020