In the Inner Mongolia Autonomous Region, an increased level of threat is declared by the end of the year. In a country that is preparing to issue a national cryptocurrency, there are more than half of bitcoin mining enterprises
China has declared the third level of epidemiological danger due to a patient who has confirmed bubonic plague. The disease was also discovered in two residents of Mongolia, one of whom, already sick, had direct contact with 60 people and indirectly with 400. China is a large market for cryptocurrencies, a significant part of miners are working there, and the authorities are preparing to issue a national cryptocurrency - digital yuan. Therefore, any global events within the country can potentially affect the value of a new type of asset.
The third level warning, which was announced in Bayan Nur, prohibits the hunting and eating of animals - possible carriers of the plague, and also urges the public to report any suspicions of plague or fever without clear reasons, as well as any sick or dead groundhogs. Forbes writes that from time to time the plague appears on all continents. For example, in the United States since 2000, an average of seven cases of human plague are registered annually. However, the disease does not spread like COVID-19, because in this case, methods of effective treatment have long appeared. In total, from 2009 to 2018, 26 cases of plague and 11 deaths were recorded in China.
Despite those infected with bubonic plague, Chinese stocks continue to rise in value. Now there is a V-shaped recovery. This is taking place against the backdrop of the weakening risks of Chinese industry due to the opening of US and European markets. For example, today, July 6, the Shanghai Composite index updated the highs of April 2019, it has grown by 5.71% since the start of trading, the growth has become one of the strongest in one day, since 2015.
“The common reason for such sentiments could be fiscal and monetary incentives adopted in the wake of the COVID-19 pandemic, as well as the fact that the Chinese market could receive support from positive macro-statistics - for example, in June 2020, the Caixin China services PMI index grew from 55 to 58.4, which is a multi-year growth record in the context of month to month. In addition, market participants also note the increased activity of Retail investors. The latter, faced with declining returns in many other instruments, are increasingly turning to the stock market, ”explained Mikhail Smirnov, an analyst with international markets at General Invest.
He warned that not all rallies in the Chinese market became long-term or stable. With further deterioration of the epidemiological situation, in case of repeated introduction of restrictions on the movement of people and business activity, the shares of companies from China can become significantly cheaper, Smirnov warned.
How cases of bubonic plague diseases can affect mining
Among Chinese companies whose shares may be affected, there are also large manufacturers of mining equipment. For example, Canaan, which last November conducted an IPO on the Nasdaq exchange and raised $ 90 million, as well as Ebang, which sold 19.3 million shares worth $ 101 million. Despite a gradual decline, the share of Chinese miners in the total bitcoin hash rate remains extremely high .
According to the analytic company TokenInsight, at the end of April this year, the indicator was 65.08%, and in September 2019 it exceeded 75.63%. For comparison, in the USA the share of miners is 7.24%, in Kazakhstan - 6.17%.
“China is undoubtedly a huge player, and the number of people in it is great. If someone comes up with a hysterical buy up of bitcoins, then locally it will have an effect, but there are no prerequisites for a serious price change, ”said Sergey Troshin, CEO of Six Nines data center.
If China is hit by a new serious virus that will quarantine, the authorities may decide to close mining plants and farms. However, cryptocurrency mining is a fairly autonomous business that does not require a large number of people. During quarantine at the beginning of the year, many enterprises continued to work, and employees lived directly on farms.
“If mining plants stop, bitcoin will fall. There are currently no significant threats to the cryptocurrency market. Even coronavirus at a significant recovery rate could not seriously affect the operation of cryptocurrencies. For some time, the risk loomed over traditional payments due to quarantines in bank offices, but not over decentralized currencies. The plague is hardly a danger to the huge Chinese economy, and even more so to cryptocurrencies, ”Troshin explained.
Why the issue of the digital renminbi does not depend on the epidemiological situation
The topic of national cryptocurrency is actively developing in China. Last week, BlocksBridge consulting company announced that Didi's second-most popular taxi booking application could be the first private company to start accepting national cryptocurrencies for payment.
This is a digital yuan, which is being prepared for release by the People's Bank of China. Now the regulator assesses the stability and practical value of the national cryptocurrency, as well as ease of use, the possibility of application at various sites and risk control. Now the development, creation of standards, research of functions and integration testing are completed. However, the release dates are unknown.
“The only case of incidence will not affect the plans of the billionth country in the field of cryptocurrencies, especially the launch of the digital renminbi. The Chinese authorities are in control of this issue. Of course, any message about the incidence in China today is perceived very sharply, given the fact that the first outbreak of coronavirus occurred in China, ”said Yuri Mazur, head of the CEX.IO Broker data analysis department.
In the first quarter of this year, the People’s Bank of China was forced to postpone the digital renminbi development program. The reason is the quarantine introduced because of the coronavirus, which has affected government agencies. The issuance of a national cryptocurrency is also necessary so that the country can counter American sanctions.
How disagreements between the US and China can affect the rate of bitcoin
At the end of June, the All-China People's Representative Assembly (VSMP) passed a law on national security in Hong Kong. The new rules, which the US government was actively opposing, began to operate on July 1. US Presidential Adviser on National Security Robert O'Brien warned that if the document is adopted, sanctions will be imposed against Hong Kong and China.
Last year, when the United States imposed sanctions against the DPRK, the renminbi weakened. As a result, Chinese investors began to use cryptocurrency as a defensive asset against the devaluation of the national currency. The demand for a digital coin was so great that users paid up to $ 300 per transaction as a bonus.
“With the fall of the national currency, the demand for cryptocurrencies such as bitcoin has traditionally increased. In the event of a pandemic, there is a growing demand for contactless virtual means of payment, because people do not want to touch money physically. If both scenarios occur at the same time, then the whole range of cryptocurrencies will be in demand, ”said Grigory Klumov, founder of the stable cryptocurrency platform Stasis.net.
According to him, a paradigm shift is taking place. The pandemic prompted a rethinking of the need to be in the office. If before people were afraid to enter the card number on the Internet, now it is a standard procedure. Psychologically, the world is increasingly opening up to the adoption of the concept of cryptocurrencies.
Diseases of bubonic plague occur almost every year, and the case in Bayan-Nur was recognized as far from the most dangerous. Experts believe that this event is unlikely to turn into something more serious, since at the moment people have learned to defend themselves against this disease. Experts believe that cryptocurrencies are not at risk at this stage. On the contrary, in the case of the devaluation of the yuan due to US sanctions or a new imposition of restrictions in the country, digital money should only win.
