It all comes down to centralisation. Chinese mining centralisation has always been a thorn in the side of Bitcoin and has been used by critics for years.
Currently, over 65% of all the global mining hashpower is concentrated in China. Mining concentration is dangerous
Moreover, with over 51% of the hash rate, miners could theoretically launch a double spend attack
Apart from this, there are also environmental concerns that come from Bitcoin mining in China. Yes, many mining farms do use hydro power but for all of the rest, they have to rely on dirty coal fired power stations.
🇨🇳 Government Crackdown 🇨🇳
This year saw the launch of China's CBDC which meant that the government wanted to take one more move against crypto. The Chinese government also has carbon emissions goals
On the 21st of May the Chinese vice premier said that the government would "crack down on Bitcoin mining and trading behavior"
The price of Bitcoin immediately fell by 6% as market participants tried to process exactly what this meant.
⬇️ Miner Exodus ⬇️
Something else that we can look at is the amount of mining equipment that has hit the second hand market.
This was further corroborated with comments from the CEO of Canaan, a large ASIC manufacturer listed on the Nasdaq. He said that these miners were "underselling" their equipment on the market.
Within Kazakhstan, similar stories abound. According to the founder of Xive, a Kazakhstan based company helping miners, he has received "daily requests" from these Chinese miners.
Alex Brammer of Luxor Tech has been fielding frantic requests from miners who are looking for data centre colocation space all over the US.
Large mining pools and cloud mining operators have suspended their operations in China.
The exodus has begun and as these miners start to move their operations overseas, we are likely to see a continued fall in hashpower
🤔 Good for Bitcoin? 🤔
Although there will be a temporary fall in the hashrate on the network, it will still be the best thing in the world for Bitcoin.
The network is meant to be robust and adaptive. If there is a fall in the hashrate the difficulty adjusts in order to bring more miners into the fold.
When the difficulty falls it means that mining bitcoin becomes easier which brings more marginal miners back into the fold.
However, in the longer term as those chinese miners are able to set up their farms overseas
And, when this hashpower comes back online it is likely to be in a country that is a lot more stable from a political risk perspective
🌲 Greener Mining 🌲
Energy production is different from Energy use. Bitcoin mining can use any energy source in order to mine coins. In other countries, they are less dependent on coal which is the dirtiest energy source there is in the world.
