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Can Bitcoin mining regulations force miners to sell again



Source : Pexels

Most networks in the crypto-space are technologically moving away from the energy-intensive process of block processing. In fact, proof of work is being discarded as a mining method. However, Bitcoin continues to be threatened because of it.

At the moment, protecting the environment is important and the power consumed by Bitcoin mining is cause for concern to many. So, the question here is – Can this become a bigger threat going forward?

Bitcoin miners forced to cave?

Over the months, miners’ situation has been seemingly improving. To be precise, it took a long time for miners to register an overall growth. However, the delay, in fact, allowed the mining industry to introspect its mining methods. Now, this brings us to the newest problem that the miners are facing – Regulations.

The demand for clean mining initiatives is driving many countries these days. In fact, most of them are willing to take thoughtful steps in order to ensure the safety of the climate by regulating mining activities.

Kazakhstan, for instance, recently set up regulatory measures. Notably, a particular limit to invest in cryptocurrencies has been set by the government. According to local media, the country aims to restrict those who provide financial proof by limiting investments to $100k per year. And, for those who do not provide any proof, the cap will be set at $1000 a month.

Kazakhstan’s President recently emphasized the point that the country’s businesses and household’s power supply will not be compromised in any way. He added that these supplies, at all costs, must remain uninterrupted. For the same, mining can and must be regulated, he concluded.

Similarly, not long ago, Sweden’s financial supervisory authority, Finansinspektionen, also solicited a ban on mining. While Sweden is at the forefront of renewable energy, the resources it draws on are limited. Such a proposal, however, wasn’t limited to Sweden.

A proposal submitted to the European Union requested an EU-wide mining ban on POW mining, in order to implement the Paris Agreement.

Will miners take damage from this?

The damage won’t appear in the form of a direct loss but as a cascading effect of the regulations. It shouldn’t be forgotten that miners are recovering from the events that transpired over the last few months led by China’s mining ban. These regulations could further harm their recovery.

Interestingly, the Difficulty ribbon recovered from its six-month-long state of compression just three days ago. 

Bitcoin difficulty ribbon | Source: Glassnode – AMBCrypto

Secondly, looking at Miners’ Position Index (MPI) and reserves, it is apparent that they do not want to sell right now. However, stricter regulations could force them to sell.

Bitcoin MPI | Source: Cryptoquant

To counter the problem though, Bitmain is expected to announce its latest mining machine in a day or two. The machine will help improve its energy efficiency ratio from 21.5 to 29.5 J/TH.

Thus, miners need to take a step in the right direction by finding more efficient ways. Or else, they could face losses.

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Aaryamann is a freelance crypto journalist working with AMBCrypto. He is currently investing his time in the crypto-space. He has a keen interest in DeFi, the ever-expanding possibilities of blockchain technology, as well as the political impact they would have.

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