Have China killed Bitcoin and if so, what does this mean for property investment?

29th October 2021

By Will Leyland

Depending on who you speak to, Bitcoin is either the saviour of the earth or it’s a flash in the pan that’s likely to sink the global economy and destroy the environment.

In truth, it’s neither, but it certainly has its pros and cons either way. On the one hand, the decentralisation of currency and money democratises currency and allows it to find its true value on the open market. For the liberals, that’s the dream.

On the flip side, mining Bitcoin takes enormous and increasing amounts of resource and energy to complete. As farming Bitcoin involves increasingly difficult mathematical computations, higher power computers and, by extension, more energy.

To remind those who aren’t familiar with Bitcoin, it’s a decentralised currency that’s run and operated by those who use it. Rather than a bank or central body holding the ‘ledger’ that has your transactions, blockchain users across the world all update one shared ledger instead.

But what’s that got to do with you, and more specifically, property?

China, investment and Bitcoin

Well, we’re glad you asked.

You may have heard recently that the Chinese government are restructuring their economy and have made some pretty enormous moves recently.

Firstly, they decided to all but ban tutoring of school children by anybody except Chinese nationals, all but collapsing a number of international tutoring companies making good money from extracurricular teaching.

Secondly, their national house builder, one of the biggest in the world, is on the verge of bankruptcy after a huge surge in building that hasn’t been matched by demand, meaning that they’re unable to repay their debts to the state and their investors.

Finally, then, this next move seems set to cause shock waves too. According to Wired, “On September 24, China’s central bank and its National Development and Reform Commission issued two documents. One outlawed cryptocurrency mining following an earlier crackdown in May, the other declared all cryptocurrency transactions illegal and all companies providing cryptocurrency trading services to Chinese citizens as engaged in illicit financial activity. Some of the usual nonplussed aplomb was deployed on crypto-Twitter, but the general reaction to the ban is that this time China is serious.”

But why does this matter?

Foreign property investment

Essentially, the more China attempts to crack down on free market activity and control the market the more it encourages capital flight outside of its borders.

One of the main beneficiaries tends to be the UK property market. When foreign investors feel nervy, they’re often looking for safe haven to park their money that offers a steady return and, as we all know, there’s not many better places in the world than UK property.

If we’re to take previous activity as a yardstick for what’s likely to happen this time around then we can expect that demand for UK property will rise quickly not just from Chinese nationals, but also those who would normally invest in China.

With demand in the UK market already sky high this could be another spark for a surge in prices, rents and yields.

Whilst that is definitely good news for UK investors it also means that the sensible heads will get in early to ride the wave of price rises and activity. With plenty of property available in hot spots like Manchester, Liverpool and Leeds, now is the time to start planning your next investment.

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Have China killed Bitcoin and if so, what does this mean for property investment?

29 October 2021

Depending on who you speak to, Bitcoin is either the saviour of the earth or it’s a flash in the pan that’s likely to sink the global economy and destroy the environment.

In truth, it’s neither, but it certainly has its pros and cons either way. On the one hand, the decentralisation of currency and money democratises currency and allows it to find its true value on the open market. For the liberals, that’s the dream.

On the flip side, mining Bitcoin takes enormous and increasing amounts of resource and energy to complete. As farming Bitcoin involves increasingly difficult mathematical computations, higher power computers and, by extension, more energy.

To remind those who aren’t familiar with Bitcoin, it’s a decentralised currency that’s run and operated by those who use it. Rather than a bank or central body holding the ‘ledger’ that has your transactions, blockchain users across the world all update one shared ledger instead.

But what’s that got to do with you, and more specifically, property?

China, investment and Bitcoin

Well, we’re glad you asked.

You may have heard recently that the Chinese government are restructuring their economy and have made some pretty enormous moves recently.

Firstly, they decided to all but ban tutoring of school children by anybody except Chinese nationals, all but collapsing a number of international tutoring companies making good money from extracurricular teaching.

Secondly, their national house builder, one of the biggest in the world, is on the verge of bankruptcy after a huge surge in building that hasn’t been matched by demand, meaning that they’re unable to repay their debts to the state and their investors.

Finally, then, this next move seems set to cause shock waves too. According to Wired, “On September 24, China’s central bank and its National Development and Reform Commission issued two documents. One outlawed cryptocurrency mining following an earlier crackdown in May, the other declared all cryptocurrency transactions illegal and all companies providing cryptocurrency trading services to Chinese citizens as engaged in illicit financial activity. Some of the usual nonplussed aplomb was deployed on crypto-Twitter, but the general reaction to the ban is that this time China is serious.”

But why does this matter?

Foreign property investment

Essentially, the more China attempts to crack down on free market activity and control the market the more it encourages capital flight outside of its borders.

One of the main beneficiaries tends to be the UK property market. When foreign investors feel nervy, they’re often looking for safe haven to park their money that offers a steady return and, as we all know, there’s not many better places in the world than UK property.

If we’re to take previous activity as a yardstick for what’s likely to happen this time around then we can expect that demand for UK property will rise quickly not just from Chinese nationals, but also those who would normally invest in China.

With demand in the UK market already sky high this could be another spark for a surge in prices, rents and yields.

Whilst that is definitely good news for UK investors it also means that the sensible heads will get in early to ride the wave of price rises and activity. With plenty of property available in hot spots like Manchester, Liverpool and Leeds, now is the time to start planning your next investment.

Will Leyland

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