A study released this month by PwC estimated that the cryptocurrency mining market in the world is going to exceed $7 billion by 2023, with China contributing about $2.4 billion. China’s government has spent the past year trying to curb excessive energy consumption in the country, and so it makes sense that the country’s miners would rather move to countries with cheaper electricity, including areas of the U.S. with cheap coal. This exodus has created a “big net positive” for the cryptocurrency market, according to Mike Novogratz, the CEO of the hedge fund firm Galaxy Investment Partners.
At the time of this writing, the crypto market is in a very depressed state, with coins like Litecoin, Ripple and Monero being worth a fraction of their value, which we are now seeing reflected in the market cap of some of the largest coins. This has prompted many to blame China for the current state of affairs, with many claiming that the centralization of mining in China has had a negative effect on the price of these coins. But the reality is that China has been a net positive for the entire cryptosphere, according to Mike Novogratz, the CEO and founder of Galaxy Digital.
As big miners leave China one after another in the wake of bitcoin’s (BTC) crackdown, Galaxy Digital CEO Mike Novogratz joined other experts who see the exodus from China as a positive development.
Novogratz explained on Bloomberg that despite China’s attempts to undermine bitcoin – such as banning mining, banning leverage and even banning bitcoin in some places – the original cryptocurrency is still alive and well. Bitcoin still exists and survives in many ways, he said, adding that the exodus of miners from China could be a significant net gain for the ecosystem.
According to Novogratz, the past few weeks of high volatility in the cryptocurrency market, with sudden and widespread price drops, have been a surprisingly successful test for the cryptocurrency ecosystem as a whole.
We had a crash, Novogratz summarized, referring to bitcoin’s 65% drop from its all-time highs, adding:
We didn’t have a dive team. We haven’t had any lawsuits yet. The system worked as it should. It is a very robust system that was built up in a short time.
Speaking about the public perception of the crypto-ecosystem, Novogratz highlighted bitcoin, which has made its own way as digital gold. Gold has been around for 3,000 years, he recalled, adding: I think bitcoin will be the digital version of gold in the next 3000 years.
Novogratz said he believes Ethereum will likely become the second largest, and perhaps even the largest, crypto-currency one day. It will be used at a fundamental level of trust, he summarized, the Web 3.0, where everything is built on this foundation. He noted that the company has strong competitors such as Terra and Solana, and that Ethereum’s victory is not guaranteed.
Novogratz also listed later additions to the crypto-ecosystem, such as decentralized finance and non-brandable tokens, before concluding:
It’s not like we’re betting on coins with funny names. This is a serious approach to reshaping the global financial architecture.
