The war between China and cryptocurrency mining by whom was it won?
Bitcoin mining is outside of China
Apparently China seems to have won, given that ad today it appears that 0% of Bitcoin’s hashrate is allocated in that country, but the question is much more complex than that.
In fact, it was a real renunciation, despite the enormous gains that cryptocurrency mining was able to obtain for Chinese miners.
In fact, the Chinese state collected a part of those earnings, without doing anything, in the form of taxes, duties and additional taxes, so the renunciation was not at all painless.
But why has China actually given up on cryptocurrency mining, despite the fact that it has long been the single nation in the world that did it the most, thus earning the most in absolute terms?
An environmental problem
In reality, the underlying problem is neither financial nor political, but economic and environmental.
Cryptocurrency mining consumes a lot of electricity. Since it is a competitive activity, the winner is the one who can pay the least for the electricity used.
China has always been favored in this, because by far one of the most easily available sources of energy in the country, and at very low cost, is the carbone. Coal, however, is also absolutely one of the more polluting fossil sources, therefore a large energy consumption of electricity produced with coal causes a lot of pollution.
The country has had a serious for years now problem with pollution, yesabove all of the air, and it has therefore been decided for some time to reduce the consumption of polluting sources, just like coal.
Furthermore, when electricity is fed into the grid, that produced by polluting sources is almost indistinguishable from that produced with clean sources, and this makes it impossible to prevent those who draw large quantities of electricity from the distribution network from using energy produced with polluting sources.
In light of this, the Asian country has decided to effectively prohibit cryptocurrency mining, to prevent large quantities of electricity produced with polluting sources from being consumed.
Since this decision is the the result of China’s inability to ban unclean energy production, by replacing it with electricity produced from non-polluting sources, this sounds more like a defeat for China than a defeat for mining.
Furthermore, as the data clearly shows, the closure of mining farms in China in June only reduced Bitcoin’s hashrate temporarily, because to date it is back to being the same as in June, if not higher. In other words it simply moved out of China.
In addition to the environmental problem, cryptocurrency mining also creates an economic problem for those who consume electricity for other purposes, since it increases consumption, and therefore costs.
A defeat of politics
Again, China’s great rejection seems to be more a defeat of their economic-fiscal policy, which is not a defeat of the miners, who simply went to mine elsewhere.
In fact, the country could, for example, impose a higher taxation on electricity used for cryptocurrency mining, thus effectively imposing a reduction in consumption. It is no coincidence that, several months later, this is precisely the solution being studied to eventually allow cryptocurrency mining in China again, or simply to increase the costs of electricity for this specific use.
In light of all this it seems that China has not won the mining war at all, just as the Chinese miners did not win. Cryptocurrencies won it, and Bitcoin first of all, which recovered everything they had lost in June.
A war on miners
China only won the war against the Chinese mineri, either by making them escape, or by making them close in favor of foreign miners.
So if on a superficial observation it might seem that this war was won by China, on a more in-depth analysis it clearly emerges that it seems that cryptocurrencies won. Certainly those who have lost it completely are the Chinese miners who have not moved to mine abroad.