Bitcoin. The magical internet money is often derided as “worthless” and “made up” by those who forget that all currencies only have value because we believe in them. Perhaps the world’s strongest currency not backed up by guns and ammo, Bitcoin nonetheless remains a controversial invention, as do the many cryptocurrencies that followed in its wake.
Recently, the Chinese government has cracked down on operations within the country. With China hosting the world’s largest fraction of Bitcoin mining capability, it’s sent shockwaves through the network and had a huge effect in a multitude of ways. Here’s what’s going down.
A graph showing the wild swings in Bitcoin mining across various provinces in China. Source: CBECI
Chinese officials instructed miners in the Sichuan region and elsewhere to shut down, while also ordering local authorities to cut off power supplies to mining operations. Banks have also been instructed to close accounts or otherwise halt transactions suspected to be related to cryptocurrency operations. With the ability to strike out and make decisions in a way not typically possible in most democracies, the move has been swift and decisive.
Whispers of the political winds changing around Bitcoin had slowed investment in additional capacity for Chinese miners for some time. Prior to the move, Chinese mining operations accounted for anywhere from 60-75.5% of the global Bitcoin hashrate. According to the Cambridge Bitcoin Energy Consumption Index (CBECI), however, the number quickly sunk down to just 46%.
With many huge mining operations going offline, the power consumption of the Bitcoin network has dropped significantly. Earlier this year, there was much ado made ..
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