“Galaxy Digital” CEO Mike Novogratz says: China’s BTC ban is a win for the rest of the world.

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In a recent interview, Galaxy Digital CEO Mike Novogratz explains that Bitcoin has shown resilience in the face of bad news from China.

According to Novogratz, the events of the last few weeks have been” an amazing test”. Judging by Bitcoin’s previous defense of $29k, he might actually be right.

Nevertheless, the Chinese crackdown, especially the mining ban, has sent shockwaves throughout the rest of the world. This has not only led to sales pressure, but as a direct consequence also to a falling hash rate and longer block confirmation times.

But Novogratz claims that short-term pain will yield “a big net positive” in the future.

China takes tough action against mining

China’s relationship with Bitcoin has not been really clear-cut for a long time. Some speculate that the recent wave of anti-Bitcoin efforts has been driven by the Chinese Communist Party, which is trying to crush competition as it prepares for a national rollout of the digital yuan.

Thus, the Committee for Financial Stability and Development of the Chinese State Council wants to introduce new controls to reduce monetary risk – under the guise of financial reform.

The notice, dated May 21, 2021, specifically mentions a crackdown on Bitcoin mining and the harsh punishment of those involved in illegal financial activities.

Since then, mining operations in Inner Mongolia and Sichuan have been suspended.

Several regions, including the United States, Kazakhstan, El Salvador and Iran, have offered themselves as a possible new home for Chinese miners.

Nic Carter, founding partner of Castle Island Ventures, anticipates that the implementation of the announcement will happen at a rapid pace. He estimates that in the end, 50-60% of the total Bitcoin hash rate will leave China.

How will Bitcoin mining change as a result?

Regarding the recent crackdown in China, Novogratz points out that it’s about more than just banning mining. However, despite the attack, Novogratz points out that the Bitcoin network is still “ticking”.

Overall, the mining exodus from China will be beneficial for the entire ecosystem, Novogratz said.

“The Chinese threw everything they could at Bitcoin, in many ways, right? They have banned mining, they ban leverage, they ban Bitcoin in some places. And Bitcoin still exists, it survived. In many ways, moving mining out of China will be a big net gain for the ecosystem.”

Bitcoin has often been criticized for” centralizing ” the miners operating from China – and estimates so far have been that the country is responsible for 65% of the Bitcoin hash rate.

However, other parts of the world will benefit from China’s turn away. The impact will be a more equitable distribution of hash power geographically-because it will reduce the risk of a single nation controlling the network.

However, it can take many months to see tangible results, since the relocation of machines or a new start in another country will not happen overnight.

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Text credit: Cryptoslate

Last updated on July 2, 2021

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