Plans to ban Bitcoin mining in China are likely to see an increase in the price, according to Mati Greenspan, analyst at trading network eToro.
“If this ban does end up happening, it is more likely to push BTC prices up than down,” Greenspan says. “The loss of cheap Chinese electricity would raise the mining cost, which is net positive on price.”
China dominates Bitcoin mining thanks to the cheap energy prices.
“It would also serve to kill the FUD (fear, uncertainty and doubt) that Bitcoin mining is centralized, which could further drive up the price of BTC,” Greenspan adds.
The news emerged on 9th April that the country’s National Development and Reform Commission (NDRC) was considering a ban on Bitcoin mining in China, with potential reasons including not adhering to relevant laws and regulations, being unsafe, and wasting resources and polluting the environment.
Consultations on the proposed ban are set to continue until May 7th.
Effects of China bitcoin ban
“Talk that any ban may be due to concerns about pollution strike me as slightly illusionary,” comments Nicholas Cawley, analyst at DailyFX.
“If that were the case a raft of other industries would be under the microscope.”
Cawley also suggests the potential ban should not be ignored, but doubts there will be any lasting effect on the market.
“The problem may occur that without the computing power provided by the Chinese mining pools, the efficiency and speed of the blockchain may come under threat until adjustments are made to block intervals.
“I’m not sure what impact China’s action will have on other countries. I think each government will have their own specific reasons for encouraging or stifling cryptocurrency activity.
“China’s potential actions need to followed closely but in a market place that is finding its feet again, any sell-offs will likely be shallow and short-term.”
The news has not been of any immediate detriment to the Bitcoin price, even flirting with the $5500 mark on Wednesday.