The weeks following the acknowledgement of the COVID-19 pandemic as a global crisis have been marked by rather turbulent market effects within the crypto industry – Bitcoin itself has experienced landmark events, most notably its much-hyped halving event.
The cryptocurrency seemed to head for the $10,000 mark after the post-halving season in which investors were expected to respond to Bitcoin’s third halving accordingly. However, the digital currency fell to $8,000 within two days amid a rather chaotic crypto scene in which the altcoins suffered similar losses.
Importantly, Bitcoin’s third week seemed to play in coincidence with two rumors, an aspect that may indicate that the media reports had a hand in the crypto’s performance.
Is Satoshi Dumping Bitcoins?
First, the price plunge came amid unconfirmed reports that Satoshi Nakamoto, the Bitcoin founder who is also thought to have created the privacy-centric Monero cryptocurrency had moved to dump his Bitcoins on the open market.
The rumor came about after a couple of blockchain analysis organizations detected a suspicious transaction in which an address, which was opened at the time of Bitcoin’s birth, moved fifty coins.
Considering that the age of the address was strikingly related to the establishment of the Bitcoin network, many observers and commentators pointed to Satoshi Nakamoto as the identity behind the transaction.
However, this rumor has been dispelled by a renowned blockchain expert Jimmy Song who has argued that the blockchain data reflects the actions of an early minor, not Bitcoin’s founder.
Is China Banning Crypto Mining?
The third week of May saw the occurrence of speculations that the Chinese government was moving to ban crypto mining. The speculations followed the leaking of a Chinese government transcript that suggested a proposed action against cryptocurrency mining.
A Twitter post by PANews, a blockchain and fintech news outfit captured the ideas behind the leaked information. Specifically, it reported that The Financial Administrative of the Sichuan province of China had sent a notice to its lower-ranking offices to sanction them to “guide crypto mining entities to close shop in an orderly manner”.
The above tweet provided an indication that China was moving to ban Bitcoin yet again, although Chinese experts have put the speculations to rest.
Matthew Graham, the General Manager of a China-based fund that specializes in blockchain investments dismissed any rumors that may suggest the country’s intention to axe the crypto mining industry. In his account, the expert said that China is not planning to ban cryptocurrency mining, and that the message behind the circular was meant to issue a warning against those entities that continue to use crypto mining to facilitate illegal activities.
China’s Massive Control Over Crypto Mining
The rumors about China’s plans to ban crypto mining can easily seem unfounded, especially at this time of financial uncertainty where traditional stock markets have tanked as a couple of governments are trying to look towards the crypto industry for salvation.
Consider this, China has always exerted significant power in the crypto industry with Chinese crypto miners controlling two thirds of the Bitcoin network’s hash rate. This disproportional control over the global crypto industry has been seen to be the outcome of the nation’s advantage in terms of access to hardware manufacturers and low power costs.
Cryptocurrency mining is a high energy process that would see miners opt to set up their hardware in countries with conditions of low labor and energy costs.
Importantly, the fact that China occurs at the center of international trade results in its relatively low production costs. A number of entities utilize sustainable energy sources although a host of these firms depend on coal for mining fuel.
Otherwise, China leads the planet in the exploitation of renewable energy sources for electricity.
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