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New policy proposals from the Chinese National Development and Reform Commission (NDRC) have put Bitcoin squarely in its crosshairs. The announcement sets the largest cryptocurrency on China’s regulatory watch list, with plans to either restrict or eliminate its mining altogether.

According to reports, the NDRC views Bitcoin mining as a major cause of pollution and a waste of resources, though the agency is gauging public opinion before further action. Currently the proposal is open for comment until May 7.

Although a sudden Bitcoin ban could cause problems for the largest blockchain network, Mati Greenspan, senior analyst at eToro, took to Twitter to point out the silver lining:

If this ban does end up happening its more likely to push BTC prices up than down.

The loss of cheap Chinese electricity would raise the mining cost, which is net positive on price.

It would also serve to kill the FUD that Bitcoin mining is centralized.https://t.co/OhVh8fUaXv

— Mati Greenspan (@MatiGreenspan) April 9, 2019

Here’s how a Chinese ban on Bitcoin mining may actually drive the tokens’s prices up.

China accounts for around 74% of the Bitcoin network’s total hashing power, as Bitcoin Magazine has reported. This is largely due to the availability of cheap electricity, which allows Chinese miners to sell their mining rewards at a lower price, undercutting their competitors abroad.

A Chinese mining ban would likely cause mining to shift to other countries, where energy costs are higher. Since Bitcoin prices correlate strongly with the average cost of mining, prices would likely rise to match the increased cost of production.

There has been much worry in the crypto community that Bitcoin is becoming centralized, due to China’s overwhelming presence on the network. This is a favorite point among Bitcoin critics, including Ripple CEO Brad Garlinghouse.

However, fears that China could wage a 51% attack on Bitcoin are exaggerated. In order to control 51% of the Bitcoin network, it requires a significant of time, energy (literally) and money to acquire an maintain that position.There is little financial incentive to spend billions of dollars controlling bitcoin only to throw them away by crashing the price.

Should official regulations hamper or eliminate Bitcoin mining in China, the country’s dominance on the network would be erased. That would give other countries the opportunity to jump in on the Bitcoin game, and relieving one of the biggest fears about the cryptocurrency. Both factors could spark a boost in the token’s value, making it more attractive to potential investors.

Ultimately, the future of the Bitcoin mining ban proposal is unknown, and so are its potential effects. However, if China should move to outlaw mining BTC, it could free up a lot of occupied space on the network, and remove much unnecessary tensions.

The author is invested in digital assets, including BTC, which is mentioned in this article. 

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The post Could A Mining Ban Raise Bitcoin Prices? appeared first on Crypto Briefing.

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