For some time now, China has been around the world as the center of cryptocurrency mining. In 2018, it was estimated that over 74% of the world’s Bitcoin was being mined in the communist country, and little has changed so far in 2019. However, things might soon change if a draft proposal is put into law by the Chinese government.

The proposal, drafted by the National Development and Reform Commission (NDRC), identifies mining as being an undesirable industry and encourages the State to get rid of what it calls a wasteful sector. If this proposal is taken up by the regime it might signal the end or a significant reduction in the region’s crypto mining capabilities.

According to the NDRC, mining causes high levels of pollution due to the intense use of electricity. China’s cheap electricity was, in fact, one of the main fuels in the growth of cryptocurrency miners. The country is also home to one of the largest manufacturer of integrated circuit chips for mining, Bitmain. The company was hoping that it would recoup some of the losses it registered in 2018, however with this latest proposal its future is unsure.

Over the last 18 months, there has been rising concern about the pollution generated by miners, not only in China but across the world. A report on the matter estimated that in 2018 more than 40 terawatt-hours (TWh) were consumed in the production of cryptocurrencies.

Those in favour of the digital currencies counter that a significant percentage of this amount was generated by renewable energy sources in the Chinese province of Sichuan. According to them, without mining hardware consuming the majority of the renewable energy produced, the majority would be wasted, as the region’s households and businesses do not require as much energy as is currently being produced.

In its proposal, the NDRC also attributes several health and safety issues as well as legal complications to the industry. Due to a lack of legislation regulating the industry, the NDRC stated that most State authorities have been powerless to act.

News of the proposal quickly spread around the web. Expert analysts have argued that if the country does outright ban or significantly limits the use of miners, the price of Bitcoin and other currencies will increase. Without the cheap Chinese power supply, the cost to produce coins will increase and this will inevitably reflect on the currency’s market value.

This price hike will continue to negatively affect traders and investors in the area. In 2018, China imposed a complete ban on ICOs and cryptocurrency trading, so those wanting to purchase the digital coin had to be ready to pay a premium through OTC platforms. Others have focused on acquiring virtual assets, as these are allowed, as is the use of blockchain technology.

It has yet to be seen what will result from this draft proposal, as there is no date set on if and when the State will make a decision. Public consultations on the matter close on the 7th May 2019.

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Changpeng Zhao, the CEO of one of the leading cryptocurrency exchanges, Binance, has revealed what he predicts will happen in the industry in the coming weeks. Speaking on CNBC’s Crypto Trader, Zhao confirmed that the number of investments and transactions have exploded over the past week.

This statement coincides with a report earlier today confirming an injection of over $38 billion in crypto economy. There is now an estimated $185 billion in a variety of crypto assets in circulation. Various currencies, including XRP, Litecoin, and Ethereum, have all seen double-digit increases during the same period. Bitcoin Cash registered a 100% increase in just a week. In fact, there has been an increase across all major exchanges in trading volume per transaction, number of orders and the number of transactions.

During his interview, Zhao stated that the fast speed at which Bitcoin’s price rose is proof that there are still many investors willing to buy this revolutionary coin. He continues to say that the FOMO, or fear of missing out effect is still clearly evident. Most investors were waiting for the slightest positive sign before they launched into a buying spree.

The CEO of one of the world’s biggest exchanges said that he’s seen a rise in stablecoin deposits, which shows that investors are choosing to diversify their crypto portfolio and seek to minimize the volatility of the market.

Zhao credits Bitcoin’s price increase as the main cause of the surge of the past days. He also states that the Binance team noted an above average increase in user registrations in the past two months, which helped to fuel the sudden growth. Once the spike started, registrations continued to increase, which had a compounding effect on the currency’s value. It is not clear for how long this trend will continue, but many believe it signals the resurgence of the industry. 

Other industry analysts are comparing the recent trend to the performance of the mainstream financial stock market. In fact, the S&P 500 Index regained losses in the past couple of months to reach January’s highs. Whilst these two results are not correlated, there is a growing analysis of how crypto markets act like traditional markets in terms of a country’s political and economic policies and results.

U.S. President Donald Trump suggested the possibility of a quantitative easing program, which normally leads to a stock market surge. Investors seek a bull market to offload their liquid assets into, and a variety of crypto investments are looking more attractive for those ready to diversify their riskier investments. Political pressure and expected changes in the Fed’s lineup could see a continued surge towards the promising returns of crypto.

As a result of the most recent spike, the price of Bitcoin reached $5,200, and whilst analysts expect this value to dip slightly, they forecast that it will remain around the $5,100 mark. 

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