The panic-sell generated by China’s new decree intensifying the ban on crypto has not yet afflicted Chinese miners, who rather than sell bitcoin, hold on to it, putting themselves in a HODL position.
The new Chinese crackdown decree, already issued in 2017 but in a softer version than the current one, has also forced Chinese crypto miners to have to stop all or part of their operations.
But, according to Weiss Crypto’s report, this new policy seems to have not yet triggered a panic-sell for miners.
— Weiss Crypto (@WeissCrypto) May 24, 2021
“The increase in miners’ coin spending in the past few days has not been significant enough to indicate that Chinese miners are panic selling.
It seems that the majority of miners are waiting to see whether the calls for crackdown will translate to actual policies. Right now, there are more ‘mined and held’ than ‘mined and sold’ coins”.
The situation of crypto mining activities in China
The crackdown announcement by the State Council, led by Vice Premier Liu He, for the first time also targeted cryptocurrency mining, in spite of the fact that, to date, it accounts for up to 70% of the global supply of digital coins.
According to reports, this has consequences for mining businesses. Firstly, crypto miners such as HashCow and BTC.TOP are at a standstill in their business.
Specifically, BTC.TOP announced the suspension of its operations in China citing regulatory risks, while crypto miner HashCow said it would stop buying new bitcoin mining equipment.
The exchange, Huobi, suspended both crypto-mining and some trading services for new customers from mainland China as of yesterday, adding that it will focus on overseas operations instead.
In this regard, the issue of mining in China has since shifted to the issue of environmental protection, as the activity consumes high amounts of energy.
Chen Jiahe, CIO of Beijing-based family office Novem Arcae Technologies, said:
“Crypto mining consumes a lot of energy, which runs counter to China’s carbon neutrality goals”.
The resilience of Chinese miners and the price of Bitcoin
Despite the market chaos dictated perhaps by China’s crackdown decree, both China’s own miners and the price of BTC seem to be holding up.
Indeed, after last week’s crash which saw the price of BTC fall as low as $30,000, in the last 24 hours the queen of cryptocurrencies has seen its price range from $35,000 to $39,000.
This is a demonstration of strong resistance to market crashes, accompanied by various statements from famous and not-so-famous crypto exponents, who have communicated through their social channels that they have bought BTC using the BTD or Buy The Dip strategy (i.e., buy at the lowest price).
Moreover, there have also been displays of siding by financial institutions. Only yesterday, the CEO of HSBC, Noel Quinn said he didn’t want to do anything with Bitcoin, while Goldman Sachs issued a new report explicitly defining cryptocurrencies as a new asset class.