Last June, China’s ban on Bitcoin and cryptocurrency mining was in the international news. This veto has two aspects, one being the inability to control these currencies and energy consumption. Well it looks like the mining Bitcoin, Ethereum and other cryptocurrencies is still present in China.
The action of the Asian giant may seem successful, but the reality is quite different. Several generation plants in the interior regions sold between 80 and 100% of the energy produced at these plants. The clearest case is that of a hydroelectric plant that supplied 100% of the energy produced to a mining farm, since it had no other claimants.
China already owns 20% of Bitcoin’s global hash rate
Although the measure of ban bitcoin mining and other cryptocurrencies in China were seen as negative. The uninformed media pointed out that this was a blow to Bitcoin and it would crash. But many specialists in the field saw something positive in it, since it decentralized mining.
We could see it in June 2021 when the Bitcoin Mining Hash Rate Dropped 60%, which highlights a problem of centralization. This could have generated a possible 51% attack and caused the value of Bitcoin to plummet, although that would have been insane. The measure forced these farms to be moved to other countries, with the United States being the main beneficiary.
Months after the ban, the Bitcoin hash rate in China is 21.1% of the total. Moreover, in September 2021, there was a hash rate of 23% at the Asian giant.
The data comes from the Cambridge Bitcoin Electricity Consumption Index (CBECI) which should be taken with a grain of salt. We are talking about an index that is not very transparent and that is based on multiple assumptions. Normally, this index is used to attack the mechanism of bitcoin proof of work consensus
We can at least estimate consumption knowing the type of ASIC for PoW (Proof of work). It would be necessary to know how much the international banking system consumes, which in terms of utility is more than debatable.
A ban that had no impact in reality
Although the hash rate (network mining power) dropped to 60%, that was early days. Currently, Bitcoin mining power exceeds the June 2021 data. It took about eight months to recover and exceed these values, which is normal, because new installations must be carried out and equipment moved.
The reality is that Bitcoin, with the exception of a few blocks that took a while to validate, had no problems. It’s because every 2016 blocks Bitcoin difficulty is adjusted, or approximately every 14 days (blocks are generated approximately every 10 minutes). So if the hash rate increases, it increases and if the hash rate decreases, the difficulty decreases.
This mechanism made it possible to quickly adapt to the new paradigm and continue to operate normally. It had been a few days (less than a week, by the way) that there was a noticeable lag between hash rate and difficulty.
What this event has allowed us to see is the technical robustness of Bitcoin and blockchain technology. He showed that it is a network that is resistant to attempts at sabotage or manipulation. Which obviously increases its value (don’t confuse value with price)