{"id":12099,"date":"2022-01-08T02:00:00","date_gmt":"2022-01-08T02:00:00","guid":{"rendered":"http:\/\/ci0296604360082481"},"modified":"2025-10-01T13:27:17","modified_gmt":"2025-10-01T18:27:17","slug":"how-china-ban-improved-bitcoin-in-2021","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/business\/how-china-ban-improved-bitcoin-in-2021","title":{"rendered":"Why China\u2019s Ban Was The Best Thing For Bitcoin In 2021"},"content":{"rendered":"
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When China\u2019s bitcoin crackdown came into effect, many speculated that the industry would never recover. Amazingly, though, the ban served to highlight both the resilience of the sector and the entrepreneurial spirit of the miners who keep the wheels of the blockchain turning.<\/p>\n

Despite the People\u2019s Bank of China (PBOC) deeming crypto-related activities illegal in September<\/a>, bitcoin enjoyed a banner year in 2021, smashing its previous all-time price high (ATH) as institutional players joined the party. Far from representing a death knell, the much-hyped ban barely had an impact in the larger scheme of things.<\/p>\n

Dissecting China\u2019s War On Crypto<\/h2>\n

Anyone who has paid attention will know that China has never been positive about bitcoin. As CoinShares\u2019 chief strategy officer Meltem Demirors cheekily noted<\/a> in September, \u201cThis has to be the 20th time that China has banned bitcoin.\u201d<\/p>\n

So, why was this particular clampdown different? In essence, because all cards were now on the table and all of the powers of the state were brought to bear to enforce the ban. While in the past, Chinese financial institutions were forbidden from providing crypto-related services, now all cryptocurrency-related activities \u2014 including trading and mining \u2014 were outlawed.<\/p>\n

In what has been dubbed the \u201cgreat mining migration,: miners based in provinces such as Xinjiang, Inner Mongolia, Sichuan and Yunnan quickly powered down their rigs and fled to pastures new: Kazakhstan<\/a>, Russia<\/a> and North America<\/a>. In the interim, hash rate fell by as much as 50%<\/a> before rebounding impressively.<\/p>\n

To be sure, there are many reasons behind China\u2019s bitcoin ban. Not only were lawmakers spooked by the asset\u2019s volatility, but they were, like various governments around the world, perturbed by their inability to influence it. Moreover, the energy-intensive nature of bitcoin mining \u2014 around 40% of Chinese bitcoin mines were coal-powered by some estimates<\/a> \u2014 threatened to undermine Beijing\u2019s commitment to reach carbon neutrality by 2060.<\/p>\n

Of course, it didn\u2019t take a genius to realize that the CCP was unsubtly shifting the spotlight to its own state-backed digital currency. According to experts, the PBOC is likely to be the first to launch a fully-fledged CBDC.<\/p>\n

In light of subsequent events, China\u2019s withdrawal from the stage can only be seen in a positive light. After all, consider what has transpired since the ban was announced: bitcoin hit a new all-time high of over $68,000<\/a>; the first BTC futures exchange-traded fund (ETF) launched in the U.S.<\/a>, allowing investors to buy and sell exposure to the asset outside of exchanges; and the United States became the world\u2019s dominant mining hub. <\/p>\n

That latter point is worth stressing: the dominant mining location is no longer an authoritarian country but a democratic one. What\u2019s more, while Chinese politicians toed the line and badmouthed bitcoin at every opportunity, several<\/a> U.S. policy makers<\/a> have embraced the asset class, setting out plans to accept tax payments in bitcoin<\/a> and even letting employees draw their salary in bitcoin<\/a>. <\/p>\n

It\u2019s likely, too, that U.S. investors are reassured by the dwindling influence of China on the mining landscape. Especially since firms like Lancium are investing heavily<\/a> in Texan bitcoin mines that run on renewable energy. <\/p>\n

Green Shoots Of Progress<\/h2>\n

To say that there has been a green revolution in bitcoin mining might be gilding the lily, but there has certainly been a renewed focus on sustainability this year. Back in May, Elon Musk and Michael Saylor announced the formation of the Bitcoin Mining Council, a venture focused on promoting the adoption of greener mining initiatives.<\/p>\n

Featuring many of North America\u2019s biggest bitcoin miners \u2014 including Argo Blockchain, Blockcap, Core Scientific, Galaxy Digital, HIVE Blockchain, Marathon Digital Holdings, Riot Blockchain and Hut 8 Mining \u2014 the council committed to standardizing energy reporting requirements and future-proofing the industry.<\/p>\n

Endeavors in places like Texas should also help with this mission: around 16 gigawatts of new wind and solar projects are set for construction<\/a> in West Texas over the next year alone.<\/p>\n

Against this backdrop, it should be no surprise that bitcoin has continued to flourish, particularly among institutional investors. According to CoinShares\u2019 most recent inflows report, bitcoin saw over $114 million<\/a> of institutional inflows at the end of November, despite prices falling by 12%. The recent ETF, meanwhile, generated $1 billion in assets under management during its first two days \u2014 becoming the fastest fund<\/a> to ever reach the milestone.<\/p>\n

After a tumultuous year, bitcoiners are now looking ahead to 2022 and speculating on the next publicly-traded firm to add BTC to their balance sheets. In years to come, China\u2019s bitcoin ban might come to be seen as a positive watershed moment for the industry.<\/p>\n

This is a guest post by Sadie Williamson. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or <\/em>Bitcoin Magazine.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The latest ban on Bitcoin activity in China generated negative headlines in 2021 but looking back, it was the best thing that could have happened last year.<\/p>\n","protected":false},"author":2617,"featured_media":1793,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[189,347,143,969,2596,1520,219],"class_list":{"0":"post-12099","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-bitcoin-mining","9":"tag-china","10":"tag-decentralization","11":"tag-energy-consumption","12":"tag-eoy-2021","13":"tag-hash-rate","14":"tag-regulation"},"author_data":{"id":2617,"name":"Sadie Williamson","nicename":"sadie-williamson","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/sadie-williamson-96x96.jpg"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/img_5987.png","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/12099","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/2617"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=12099"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/12099\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/1793"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=12099"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=12099"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=12099"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}