Bitcoin (and other digital currency) prices dropped over the weekend due to a Chinese government crackdown on cryptocurrency mining.
China Communist Party (CCP) doesn’t really like Bitcoin. They can’t control it and can’t easily surveil their citizens on it.
On the flip-side, many Chinese people seem to like it. Easy access to computer hardware and cheap energy made cryptocurrency mining very profitable for many Chinese entrepreneurs.
Earlier this month Chinese miners were responsible for about 65% of the mining computing power worldwide.
But China has a long history of censoring tech platforms they can’t moderate or control. Since the late 90s, China has been using its “Great Firewall” to block sites at the network level, only to replace them with Chinese versions the CCP can easily surveil.
But blocking a decentralized protocol like Bitcoin isn’t as simple. The network is run by thousands of individuals and companies. Each running the full Bitcoin application, myself included. They’d have to get creative to block us all.
Instead, China worked overtime to shut down any business that facilitated crypto trading and now has gone after the miners.
In the short term, a decrease in miners makes Bitcoin easier to mine for the facilities still running. With existing miners getting a surplus of Bitcoin, supply goes up and the price goes down.
New mining companies will emerge. The price will go up again, but for now, you can think of it as a sale.
Buy the dip!