The announcement sent Bitcoin prices reeling back in September, 2017:
The dreaded Bitcoin ban in China.
A matter of weeks later, Bitcoin approached its highest prices ever, joining mainstream culture around the Thanksgiving dinner table as children and grandparents alike rushed to sign up to Coinbase to buy their very first, very expensive Bitcoin.
The much-feared Bitcoin ban in China had little to no impact in the long term.
China has experienced a love-hate relationship with Bitcoin. The people of China love the currency, but government officials seem to despise it. Perhaps it’s because the technology offers a method of transacting value that can not be directly controlled by any government, including China’s. Perhaps it’s because the technology appeals to those who question the “goodwill” of central powers who balk at the anti-establishment ideals that grew out of cypherpunk ideology.
China’s influence over Bitcoin and the larger cryptocurrency market should not be overlooked. It hosts a massive army of mining power that secures Bitcoin’s network, pushing the difficulty ever onward and thereby ensuring its reliability. A drop in hashing power would, at least temporarily, cause a reduction in the network’s security, leaving it more vulnerable to attacks.
But the software behind Bitcoin has been built with problems like this in mind. When hyperbolic stories of ASIC miners being discarded en masse in China emerged, hashing power fell temporarily, and the difficulty of mining Bitcoin blocks eased, resulting in a subsequent resumption of profitable mining at a lower hashrate. Weeks later, difficulty climbed back up as more miners joined in at the newly-profitable hashrate. Things balanced out with little in the way of drama, other than that which was fabricated by those seeking more clicks and comments.
In reality, what will likely happen with this most recent Bitcoin ban talk is summed up succinctly by Boxmining’s Michael Gu:
That is, not a whole lot, other than an eventual increase in demand for Bitcoin.
And even if China successfully wipes out widespread mining throughout China (not very likely), miners will pick up the slack elsewhere — because it will be highly profitable to do so — especially if the temporary drop in hashrate lowers the difficulty for block rewards.
Either way, Bitcoin will continue on.