The Central Bank of China, the PboC, may be reconsidering its ban on cryptocurrencies in the country, as the central bank's deputy governor, Li Bo, recently stated that Bitcoin should be used as an alternative investment tool.
In his participation in the Boao Forum for Asia (BFA), the deputy governor of the Central Bank of China (PboC), Li Bo, expressed a new opinion on the cryptocurrencies, , the Bitcoin (BTC), which differs from the attitude that the country's government and the central bank have maintained regarding this class of digital assets in recent years.
According to Bo's statements, digital assets and, especially Bitcoin, should play an important role in the financial system in the future, either as an investment tool in the markets or as an alternative investment. Bo's participation in BFA was reviewed by local journalist, Colin Wu.
The statements by the deputy governor of the central bank show that China is evaluating and considering investing in cryptocurrencies. If cryptoassets are accepted as investment assets, the country's central bank would also be recognizing Bitcoin and cryptocurrencies as reserves of value. However, Bo clarified that, for now, legal regulations on the use of Bitcoin and cryptocurrencies remain in force in the country, until the financial risks that the volatility of these markets can cause for investors are evaluated.
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A love and hate relationship
Although cryptocurrencies are prohibited in China as a form of money, and cannot be used, legally, in the trading of crypto to fiat and vice versa, the country has not completely prohibited the use of these digital assets, nor all the activities that are involved. can do with them. An example is the bitcoin mining. To date, more than 60% of hash rate of the Bitcoin network is dominated by the Asian power. This means that the majority of the miners that contribute computing power to this network blockchain They have their facilities located in China.
The largest manufacturers of mining equipment for BTC are also located in the country; All of this is seen by several analysts as a political strategy by China to confront the dominance of the United States, as the world's leading power.
Bans, banking controls and power cuts
However, Bitcoin miners have been experiencing a new reality in the country for a few months. Inner Mongolia Province banned recently Bitcoin and cryptocurrency mining in its territory, alleging that this activity is triggering energy consumption, and affecting the supply to communities and the environment. Inner Mongolia is one of the regions of China with the cheapest electricity rates and, therefore, where a large part of the country's miners were located.
Also, the government has been imposing new rules for cryptocurrency miners, who must justify the origin of their funds to banking entities. Several miners were affected when commercial banks blocked their accounts and banking products, such as plastic cards, until they made the corresponding declarations about the origin of their funds. This situation caused great concern, inconvenience and panic in the crypto community.
On the other hand, the network's hash rate is being strongly affected by security inspections in Xinjiang province, which are causing extensive blackouts that have forced mining pools to suspend part of their mining operations, especially in Bitcoin.
The most affected mining pools are: Poole's, AntPool, Binance pool, BTC.com y Huobi.pool.
The uncertain outlook experienced by miners in China is leading them to look at new options in other countries, such as the United States. In the North American nation, Bitcoin's hash rate is getting stronger every day, so the PboC's possible intentions to accept cryptocurrencies as alternative investment assets may be motivated by the need to continue maintaining geographic dominance over this network.
A drop of more than 23%
Bitcoin's hash rate hit a new high this weekend of 200 EH/s; There are even data providers that show growth greater than this figure. However, due to power outages in China, Bitcoin's hash rate has decreased to 153 EH/s, reflecting a drop of more than 23%, according to this data source.
Other platforms like Fork show a Bitcoin hast rate above 209 EH/s for April 15, and a drop to 98 EH/s at the time of this edition, so the decrease in the network's computational power is greater than 53%, according to this provider's data.
The price of Bitcoin has accompanied the drop in its hash rate, with a decrease in its value of more than 15%. BTC was trading close to $53.500 this Sunday, although at the time of this edition its value is close to $XNUMX. $57.000.
2022, the year of the digital yuan
China is preparing to officially launch its digital yuan, called DCEP, the digital currency issued by the central bank (CBDC) of the country, which will have its value backed by the physical yuan, for the 2022 Winter Olympics.
So far, the country's central bank has conducted numerous tests to evaluate the performance of its digital currency in various real-life environments. The PboC has said that the DCEP will have an initial “domestic” use, that is, for the commercial operations of the population in daily life. However, the bank has aspirations to internationalize its currency, and present it as an efficient alternative for international trade. The application of the digital yuan in cross-border transactions is already something the PboC is conducting tests on.
Continue reading: Bitcoin miners migrate to China, network hash rate falls
