In less than a month, one of the most significant decisions impacting the price of Bitcoin will be revealed when China’s mining ban proposal returns after public consultation. With the source of a majority of Bitcoin’s hashpower being nipped in the bud, many analysts predict this could have grave implications on the larger market.
Mati Greenspan, a senior market analyst with eToro, debunked the FUD created by the proposed ban. In an exclusive interview with AMBCrypto, he added that the ban needs to be viewed from a more holistic perspective. He toed the line, suggesting that a bullish trend cannot be confirmed. However, the chances of the market going up rather than going down are more likely, he said.
“What my feeling is, is that it’s more likely to be bullish than bearish.”
The mining report by the country’s National Development and Reform Commission [NDRC] was “largely misunderstood,” according to Greenspan, with many in the crypto-community suggesting that a price decline was imminent.
The way the report was being perceived was short-sighted, he added, as the origin of the ban was way back in 2017. Greenspan added that China is employing a “multi-decade strategy,” not to target cryptocurrency, but to become a “clean energy country, within the next few years.”
In light of this national objective, the electricity consumed by Bitcoin miners is not “clean” and hence, according to Greenspan, the government began to push for a “gradual phase out” of the mining industry in 2017. He added that the government employed the tools of regulation and taxation to “limit the [mining] activity so that it doesn’t get out of control.”
The mining ban was not an isolated attack as several other industries are mentioned in the NDRC report, Greenspan added. According to a Reuters report, cryptocurrency mining was on the list of over 450 activities which would be “phased out as they did not adhere to relevant laws and regulations, were unsafe, wasted resources or polluted the environment.”
Given the NDRC report first came out in 2011 and the industries mentioned have not been banned, Greenspan believes it is unlikely that Bitcoin mining will be immediately outlawed if the ban is approved.
He specified two scenarios that could materialize if the mining ban were put into force. On one hand, China’s hashrate would plummet, leading to other countries “more likely” stepping into the fore, with their respective mining farms. Given China’s “extremely cheap” electricity for mining being replaced, the cost of production would rise.
Based on historical prices and the trends of other industries, this would invariably lead to an increase in the price of Bitcoin.
On the other hand, if China’s hashpower falls and is not replaced by other countries, Greenspan believes,
“The difficulty for mining each Bitcoin would come down, so the average cost of Bitcoin would stay about the same.”
Greenspan also shed some light on other aspects that could influence the market. He highlighted the improvements in mining equipment, which if made more efficient, can severely impact prices.
“If mining equipment gets more advanced so that they can be more efficient and provide more hashpower for less kilowatts, that also raises the difficulty in mining.”
Greenspan concluded by stating that the report did set FUD in the market, which was largely inconclusive of the entire picture as there are a plethora of “moving parts.” Hence, the myopic view of the ban should not be a “reason to dump Bitcoin.”