China has effectively banned Bitcoin - for real this time? Well, let’s see…
Banks and financial institutions have been ordered to stop facilitating transactions with crypto businesses - including personal transactions.
China has ordered all Bitcoin miners to shut down. China FUD had been circulating for a couple of months, but it intensified in the last 3-4 weeks and then government orders dropped like a hammer.
Why did they do this?
Simple: Centralised government doesn’t like decentralised asset giving citizens the freedom to opt-out of government monetary policy - especially when the Digital Yuan is about to be launched.
Complex (and fanciful): China FUD was concerning US institutions, for both geopolitical and environmental reasons. To facilitate the displacement of the USD, China shutdown Bitcoin in the country, thereby removing an obstacle to further adoption. Hmm probably not :)
Whatever the motive, the effect on the hash rate has been significant with almost every major mining pool seeing big drops in hashrate:
The good news is that Bitcoin mining will become more geographically dispersed.
Chinese miners have been moving at breathtaking speed:
The USA will attract many miners with Texas, Miami and New York all vying to become the “Bitcoin Hub” of the USA.
…and Grayscale’s parent company Digital Currency Group launched a US-based mining pool with grand ambitions.
8BTCnews @btcinchinaHistoric moment: Sichuan mining farms will all be closed in the early morning of June 20, and Chinese miners may usher in the darkest moment #Bitcoin #bitcoinmining
Kazakhstan has been an early winner from the move away from China:
While there are benefits to Bitcoin mining moving away from China, it’s also going to be challenging to find renewable energy sources to replace hydro-powered Bitcoin mining from the Sichuan province of China.
On that count, there’s much hope:
How Texas’s wind boom has spawned a Bitcoin mining rush
- MIT Tech Review
Texas’s wind-powered digital gold rush might redraw the global map of the Bitcoin mining network…more
El Salvador is serious about Geo-thermal powered Bitcoin mining…from a vocano!
Paraguay is also warming up to Bitcoin with legislation due to be introduced in July. Momentum is building, but it remains to be seen whether it will have enough votes to pass as it is being introduced by a minor party.
TheStreet @TheStreetAre Central and South America embracing #Bitcoin? Congressman @carlitosrejala calls for Bitcoin adoption in Paraguay. https://t.co/2JeGNjP2ZN
Paraguay is the co-owner of the Itaipu Dam, the second largest hydro-electricity power station in the world - and it exports most of its share of the electricity to Brazil. Paraguay also has the Yacyretá dam.
My hope is that both El Salvador and Paraguay will serve as an example to motivate Brazil to join the Bitcoin mining party - they own 3 of the 7 largest hydro-power stations in the world.
There’s a lot of change which is painful in the short term, but unlike inflation, this WILL be transitory. The miners have moved quickly, the hashrate will recover, difficulty adjustments will be made…
If you enjoyed this, please share it with your friends.
Thank you for reading :)
p.s. Sorry it has been a while between newsletters. I’ve been moving apartments and it’s been hell. Don’t ever move. Wherever you are, just stay there - FOREVER! :))