The ban imposed on Bitcoin mining in Inner Mongolia, an autonomous region of China, might see a shift in the industry - which some analysts say is good for Bitcoin.
Cryptocurrency mining is the process of using computing power to verify transactions on a blockchain network and earns cryptocurrency for providing that service. It is legal in most countries - with exceptions being Algeria, Egypt, Morocco, Bolivia, Ecuador, Nepal and Pakistan.
According to the Cambridge Centre for Alternative Finance, around 70% of the hash rate - or a measurement of how many times the Bitcoin network is able to attempt to complete calculations every second - for mining Bitcoin is generated in China. Giant data centers with computers to process and verify transactions on the blockchain are scattered across the country - located mostly in areas with cold climates, low rents and cheap electricity.
Around 8% of the hash rate generated in China is in Inner Mongolia. In April, the local government imposed a ban on Bitcoin mining as a result of pollution and energy concerns. Operators in the province were given two months to close down.
Cryptocurrency experts said the ban is good for the industry. The ban is expected to push some operators to relocate overseas - particularly to places with stable regulations and better infrastructure. The closing of mining operators in Inner Mongolia is expected to give other players a chance to pick up the slack and earn more.
Last month, the industry was momentarily crippled as a result of a "black swan," or unpredictable, event - Bitcoin mining facilities went offline after a flood at a coal mine knocked out power in the region. The incident disabled more than a third of Bitcoin's hash rate and the fees for transactions rose substantially.
Bitcoin mining facilities are essentially large data centers with thousands of computers verifying transactions on the global blockchain ledger. These data centers consume a lot of electricity and run nonstop. According to the Cambridge Bitcoin Electricity Consumption Index, the amount of electricity consumed to mine Bitcoins is more than the electricity consumed by entire countries such as Argentina and Ukraine.
Whit Gibbs, the chief executive and founder of mining services company Compass Mining, said the drop in hash rate owing to the ban may not be bad for the industry. Gibbs said miners in China would undoubtedly lose money but miners elsewhere will benefit.
"Bitcoin has self-correcting economic measurements that help it to sustain in these times. When some miners go offline, mining competition decreases for those that remain online, making the mining process easier and therefore more profitable," Gibbs said.
