Last week, China announced another initiative to ban crypto mining within its territory, hitting the crypto market badly. This isn’t the first time that China has come down on crypto, and this time major exchange Huobi reacted by shuttering numerous services.
In the view of the CCP Bitcoin mining concentrated in China is a liability. Coal-fuelled power plants, China’s predominant electrical generation, makes Bitcoin “dirty” environmentally speaking. Bitcoin may also help Chinese citizens move value out of the nation illegally.
Huobi Cracks Down on Numerous Services
In response to the Chinese Government crackdown on crypto, Huobi announced the suspension of crypto investment services like futures contract trading, exchange-traded products (ETP), miner hosting services, and also suspended the sale of crypto mining machines.
Huobi operates the eighth largest mining pool in the world with 4% hashrate of the entire Bitcoin network. While China’s attack on miners may be good for crypto in the long run, the flood of cheap mining machines that will hit the market soon is another consideration.
The recent market drivers suggest that going forward decentralized systems need to take both the environmental concerns and widespread usage into consideration, as both seem to be hitting the market at the same time.
More Changes May be Coming
China cracking down on Proof-of-Work crypto miners (such as Bitcoin and Ethereum) could be a good thing for crypto – as miners will easily find other places to mine PoS tokens, maybe with higher operating costs, but with cleaner sources of power.
This shift in crypto energy sourcing may also address a security on the Bitcoin blockchain.
The mining concentration in China is deemed as a threat of a so-called ‘51% attack’, in which a single entity gains control over 51% or more of the mining power in the world, allowing it to invalidate the immutability properties of the blockchain to rewrite history.
Another is power shortages, as happened some weeks ago when a gas explosion affected a coal mine in the Xinjiang region. The Chinese government had to shut down electricity affecting cryptocurrency mining farms, ultimately resulting in Bitcoin’s global hash rate dropping by 50%.