Resistance is meaningless!  3 reasons why Bitcoin mining will never go away

Resistance is meaningless! 3 reasons why Bitcoin mining will never go away – Mail Bonus

In the summer of 2021, the Chinese government banned the mining of Bitcoin (BTC) and cited typical concerns about the harmful effects of the environment and money laundering. The Chinese government is currently working to establish its own digital yuan currency. This raises the question of whether the original argument was only a Trojan horse.

This ban could easily have been a major setback for Bitcoin’s momentum. After all, nearly 75% of all Bitcoin mining in China was practiced in late 2019, according to the Cambridge Alternative Finance Benchmarks. If the Internet loses under China’s heavy national ban, other governments may have begun to believe that Bitcoin could be defeated after all.

China’s ban was a bitcoin stress test

For a short time, the ban worked as expected – by the end of June 2021, the Bitcoin Internet’s hash rate had dropped to 57.47 emissions per second (EH / s), down by several times. On the other hand, the hash rate returned to 193.64 EH / s in December 2021 and in February 2022 it reached a record high of 248.11 EH / s.

The whole test was a test that Bitcoin passed with flying colors: Banning Bitcoin mining proved to be as effective as the ban on killing drinking culture in the United States.

In early 2022, the obvious explanation for the recovery of the hash rate was that miners who had established a trade in China had simply fled to the western hemisphere. There was plenty of evidence that seemed to support this hypothesis – first and foremost, the United States’ share of the global hashish ratio exploded from 4.1% in late 2019 to 35.4% in August 2021.

Part of the global Bitcoin hashrate. Source: University of Cambridge, Reuters

The ban created a scattered black market

However, the so-called “mass migration” may not have been the only unintended consequence of China’s ban. As of May 2022, miners in China accounted for 22% of the global hash rate – a figure that is not as prevalent as before, but no small slice of the pie either.

As the Cambridge Center for Alternative Finance reports:

“It is likely that an insignificant proportion of Chinese miners have quickly adapted to new circumstances and continued to work in secret while hiding their whereabouts by using foreign agency services to divert attention and observation.

In fact, it is likely that there is now a huge black market for Bitcoin mining in China.

Try as they might, one of the most authoritarian governments on earth can not prevent its citizens from accessing Bitcoin. Economically, the potential benefits for miners in China outweigh the costs of being taken aback.

Despite concerns and doubts expressed by “experts” about Bitcoin, miners in China value their operations so much that they are willing to risk breaking the law to get their hands on an international reserve fund in the future.

International competition for miners is growing

Despite the rise of China’s black market, there is no doubt that the US economy benefited from China’s ban. Just outside of Kearney, Nebraska, a company called Compute North operates one of the largest data mining cryptocurrencies in the United States. At the time of the ban in China, the company received calls from operations trying to move its mining equipment from China to the United States.

Compute North welcomed its new partners with open arms. “We doubled in size,” said their chief technician. “We were busy all summer. […] And it’s just getting bigger and bigger demand all the time. “

Other cities, such as Rockdale, Texas and Massena, New York, are also witnessing growth in the cryptocurrency mining ecosystem.

All of this migration could create a vicious circle for China and a vicious circle for the United States, which means that all sorts of other Bitcoin-related opportunities are also moving from China to the United States. Lamont Black, a professor of finance at DePaul University, believes that the recent influx of Bitcoin mining to America could strengthen the country’s broader blockchain economy.

And this logic works both ways – to the extent that Bitcoin miners are leaving China, then Bitcoin’s business activities will increase with them.

Although refugee miners considered countries other than the United States, miners seem to prefer America because of their relatively strong respect for property rights. One miner from China said: “Maybe the government [of countries such as Russia or Kazakhstan] are not only shutting down operations but also taking over […] all your machines. You could lose everything, so the United States is a safe bet. ”

Delivery to the governments of the world

This black market phenomenon should be a lesson for Western politicians: If the Chinese government can not ban Bitcoin mining from existence, you can not either.

As the United States advances in its regulatory impact study, traditional financial institutions are closely monitoring its movements. Retail and institutional investors are also keeping a close eye on market fluctuations as they fight inflation at home. At this point, trying to put the toothpaste back in the tube is a waste of energy. Bitcoin mining is not disappearing.

The United States and other world leaders must learn from the mistakes of others so that they do not have to repeat them. China wasted its energy so that others would not need it.

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William Szamosszegi is the CEO and founder of Sazmining, the world’s first pure energy Bitcoin mining platform for retail customers. He is also the host of the Sazmining broadcast and as a Bitcoin evangelist, Will is committed to improving humanity’s relationship with time, money and energy. Will is a recipient of the Bucknells Project Grant, a finalist in SXSW’s Digital Entrepreneurship Tournament, a Forbes Fellow, and a regular speaker at Bitcoin Mining Conferences.