China wants to eradicate 10% of the global BTC hash rate, who will take the lead?
The government of China’s Sichuan province is moving to end Bitcoin mining (BTC) activity, citing that rising prices for cryptomonies have led to the intensification of illegal activities under the guise of mining.
Sichuan: 10% of global hash rate
According to Cambridge University estimates, Sichuan is responsible for almost 10% of global hashrate. In fact, this single Chinese province mines more Bitcoins than the entire United States or Russia.
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Sichuan was apparently trying to attract miners to combat the economic downturn and employment caused by the COVID-19 pandemic. Instead, „illegal fundraising“ and multi-level marketing schemes allegedly flourished.
It is unclear whether these recent problems will end mining in Sichuan. China’s cryptocommunity has flourished despite government restrictions. Christopher Bendiksen, head of research at CoinShares, told Cointelegraph:
„I don’t think Bitcoin Circuit / Bitcoin Evolution / Immediate Edge / Bitcoin Profit / Bitcoin Revolution / Bitcoin Billionaire / Bitcoin Code / Bitcoin Era / The News Spy / Bitcoin Trader miners in China have been, you know, quote, unquote, comfortable. If you mean they feel secure about their property rights. And, you know, the idea that the government just won’t show up one day and take everything. I really doubt that they’ve ever been comfortable with that. Now, it’s probably worse than ever.
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However, what if this time, the authorities took their directives seriously and moved with all their might to eradicate all Bitcoin mining in Sichuan? Who would take the lead?
To the west?
Philip Salter, chief operating officer of Genesis Mining, the company that emphasizes that it does not mine in China, told Cointelegraph
„The thing about China is that China has cheap production costs, the CapEx is very low. Everything is cheap and fast in China. But the operating costs <…> are not that low because most of the country is coal-fired and coal is the most expensive energy source. So, in reality, operating costs are not that good in China.
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Probably the most profitable and stable miners could move their equipment to other Chinese provinces. It could also add fire to the industry’s latest pro-Western trend. Even the Chinese giant Bitmain has been operating a 50-megawatt farm in Texas. Bitcoin’s mining in Texas has been growing thanks to low electricity prices and friendly local officials.
With halving already putting great pressure on the miners, leading to a reduction in hashrate, this latest stress test will test Bitcoin’s endurance once again.