Authorities in China have cracked down on BTC mining companies. On the 5th of November, the power supply to miners in Guizhou and Xinjiang was cut off. This had a severe impact on the BTC hash rate, down 10% since the cut off (from 50 Exahash/s to 45 Exahash/s).
A hard time for BTC mining companies
Many cryptocurrency mining companies rely on slim profit margins, especially with the recent bear market carnage. One BTC mining farm in Sweden recently left with an outstanding debt of USD 1.5 Million in unpaid electricity bills. The closure could easily bankrupt many of the mining farms. While some of the mining companies were given prior warning, the majority were caught unaware. They were also forced to sign a document that read-
“According to the needs of the public security department’s network information security work, in the future, our company will implement higher standards for the company’s business real name system according to the work needs of the public security department. For customers with the latest standard real-name system, the data center will have to suspend reloading, restarting, moving in and out, etc.”
The primary reasons for the shutdowns are related to taxation and identity verification. Many of these mining companies are reported to have unpaid taxes, which is sure to draw the attention of the Chinese authorities. The power supply has not yet been reconnected as of the time of this writing, and BTC hash power remains down.
Fears of Chinese conquest
The ability of the Chinese government to close BTC mining companies has been the most frequent criticism of Bitcoin. The majority of BTC hash power is located in China. The Chinese government, with its reputation for trampling over individual rights, could easily acquire the mining farms should BTC become the world’s first unofficial world currency. It stands to reason that this is exactly what it will do if this occurs. Once it has over 50% of the BTC total hash rate, it will essentially control the network. The state is also launching an initiative to remove anonymity on the blockchain and is not averse to taking control of online outlets with strict censorship policies.
Even the Whitehouse has taken notice. As reported by Forbes, President Trump has hinted at using Ripple (XRP) as a means of combatting Chinese dominance over BTC, in a potential crypto-based geopolitical battle. Of course, this sort of partisanship goes against the values and ideology of DLT. Cryptocurrencies are intended to be a unifying force for all global citizens at the expense of nation states and centralized bodies. Hopefully, people will not be misled into taking sides at the expense of a collective and collaborative societal advance for all.
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.