It is no secret to anyone within the crypto community that the majority of Bitcoin mining takes place on Chinese soil. And, the low electricity costs have allowed the emergence of large mining farms in the Asian giant, leading to at least 65% of all BTC mining being under Chinese control. For this reason, economist and geopolitical expert Haral Malmgren wonders if Chinese Bitcoin mining is a threat in the Tweet of the Day:
Hmm. If 2/3 of world Bitcoin mining done in China, doesn’t that suggest high political risk for both individuals and institutional Bitcoin investors? https://t.co/2MaRlVr0mn
– Harald Malmgren (@Halsrethink) February 20, 2021
Chinese Bitcoin mining, threat or opportunity?
In the entire world there is no country that has greater influence over the world of cryptocurrencies than China. Despite the fact that, initially, the Asian giant implemented extraordinary measures to prevent the emergence of crypto-asset exchanges in its territory. Going even to expel Binance from the country. In recent years the number of mining farms has been increasing in Chinese territory.
This has been helped by low electricity costs in the Asian country, as well as a permissive policy on the part of the government with respect to mining. Supporting the dominance of the network by its miners, although without tolerating that Bitcoin is used as a replacement for the Chinese yuan.
The result of these factors has been the concentration of more than 65% of the mining power of the Bitcoin network in Chinese mining farms. Which provides these companies with practical control over the BTC Blockchain. Possessing more than 51% of its computing power, and therefore being able to influence it. Something that represents a significant risk for investors according to Harald Malmgren:
“If 2/3 of the world’s Bitcoin mining is done in China, doesn’t that suggest a high political risk for both individuals and institutional Bitcoin investors?”
In this way, Malmgren points to the risk that the union of Chinese mining farms would represent, either autonomously or by order of the government. Which would allow them to manipulate operations on the Bitcoin Blockchain at will. A result that, although not given so far, should serve users as a warning against the concentration of mining power.
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