China’s Persistent Influence in Global Bitcoin Mining
US vs. China: A Hashrate Competition
While China continues to dominate, the United States is swiftly catching up, now accounting for approximately 40% of the Bitcoin network’s hashrate. According to CryptoQuant CEO Ki Young Ju, this significant portion is largely attributed to institutional miners in the US, who utilize cutting-edge technology and substantial resources to stay competitive.
The Crackdown on Cryptocurrencies in China
China’s approach to cryptocurrencies is among the most severe worldwide. The crackdown began in 2017 with a ban on Initial Coin Offerings (ICOs) and the closure of domestic exchanges, escalating in 2021 with a sweeping prohibition on mining and trading activities. These measures aim to mitigate the financial and environmental risks associated with digital currencies.
However, the decentralized nature of Bitcoin has enabled Chinese miners to circumvent these restrictions, maintaining a significant influence over the global network. Underground crypto trading also persists, facilitated by VPNs and social media, with transactions reportedly reaching around $86 billion annually.
Simultaneously, China is advancing its digital yuan, a central bank digital currency (CBDC) spearheaded by the People’s Bank of China (PBoC). This initiative is part of a broader strategy to enhance financial control while curbing the influence of decentralized cryptocurrencies like Bitcoin.
Potential Softening of Crypto Regulations
Amidst these stringent regulations, there are signs that China may be reconsidering its stance on digital assets. This potential regulatory softening is particularly evident in its treatment of Hong Kong, which is rapidly emerging as a crypto hub with tacit support from Beijing. Industry leaders, including Tron founder Justin Sun, have advocated for China to revise its crypto policies to foster competition with the US, which could catalyze significant advancements in the sector under the pro-Bitcoin agenda of former President Donald Trump.
China seems to be preparing for a revised approach towards cryptocurrencies, as ongoing interest in blockchain technology and subtle shifts in regulatory frameworks hint at upcoming policy adjustments, though they haven’t been officially confirmed yet.
For more insights into the evolving landscape of blockchain and cryptocurrency, explore our extensive coverage on blockchain for sustainability and the exploration of central bank digital currencies.
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