Will Digital Yuan Launch Cause Bitcoin (BTC) Collapse? What relationship? The answer lies in the possible or impossible cohabitation between the BTC and the Chinese CBDC. China now controls over 50% of Bitcoin’s hashrate. Miners in one Chinese province have been deprived of electricity as Bitcoin’s global hashrate drops 10%.
More juice for Bitcoin
Several local media reported that electricity producers in Yunnan, the 4th largest province in China in terms of hashrate of Bitcoin, were forced to stop supplying energy to some miners.
The authorities of the city of Baoshan have stepped up their efforts to crack down on mining operations, according to official documents shared by the journalist Colin Wu.
The latter points out that the ban was undoubtedly motivated by local economic interests and that it is not a political decision of Beijing aimed at suppressing the mining industry.
The ban coincides with a 10% drop in the global hash rate of Bitcoin, without the 2 events necessarily being linked.
The electricity war
The Yunnan represents 5.42% of the global hashrate and ranks behind the Xinjian, the Sichuan and the Mongolia interior.
In June 2020, Wu had reported that the authorities of Yunnan ordered the closure of 64 illegal mining operations, citing tax evasion and security risks as arguments.
During the same month, a fire broke out in a mine BTC local, resulting in the destruction of several units.
On May 29, 2020, an explosion at a hydroelectric power station killed 6 people.
This incident had led to a drastic follow-up in terms of the application of safety standards within the power plants in the region.
In April 2020, the authorities had already warned some producers against the diversion of electricity for the mining of Bitcoin.
The Chinese authorities have their hands on the button that can blow up Bitcoin, by depriving BTC miners in its territory that produce more than 50% of Bitcoin’s hashrate of juice. The increase in the difficulty of mining certainly secures the network, but it is also at the origin of a centralization of BTC mining. Only large operators can stay in the mining race given the huge costs incurred. China was and still is one of the top destinations for miners. This mining paradise could well become Bitcoin’s hell, the day the Chinese government decides to attack Satoshi Nakamoto’s baby, so that his own can grow.
Litecoin, welcome in the Silver Age