Mine, uncrafted... China's not playing games. Bitcoin plunged to a two-week low yesterday after China cracked down on miners. Chinese authorities reportedly ordered a halt to crypto mining, forcing the shutdown of many mining "farms." China already bans companies from offering crypto-related services — but this crackdown is next-level:
- Strike #1: An estimated ~90% of China's Bitcoin mining capacity has been shut down.
- Strike #2: China set up "snitching hotlines" to report anyone pumping out BTC.
- Strike #3: China urged Alipay and other major banks to kill any crypto trading.
Much coin energy... An estimated 65% of global Bitcoin mining happens in China. Mining computers use mountains of electricity to validate transactions and mine new coins. China relies heavily on coal power, so that electricity burns a lot of "dirty" energy. Now, China is cracking down to help meet its climate goals. The authoritarian state also doesn't love the decentralized nature of BTC (#digiyuan-only).
The digital is physical... Websites, photos, and docs that live in the cloud really "live" in massive server farms. Likewise, digital currencies like Bitcoin need swaths of computer networks to exist. A "mine-gration" from China, coupled with the growth of American miners, could bring industrial-scale mining to the US. That requires vast amounts of land, water, and electricity. While that could be good for mining companies, it will likely raise more enviro concerns.