It is estimated that 75% of the Bitcoin mining is done in China; thus, it logically follows that if the Chinese government wanted to ban all mining, it would certainly cause it some very serious problems. And china intends to do just that, which begs the question, will this be the end of the cryptocurrency? It just may be the case, at least in China.
Granted, there are tons of various “alt coins” in the cryptocurrency sphere competing with Bitcoin, but virtually all of their values are tied into it in some way. Many of the exchanges only let you cash out after converting to it, so I don’t see this as anything positive for Bitcoin, let alone the entire cryptocurrency market.
The government will “crack down on bitcoin mining and trading behavior and resolutely prevent the transfer of individual risks to the society,” said the statement, which was issued by the Financial Stability and Development Committee of the State Council, the country’s cabinet equivalent. The committee is chaired by Vice Premier Liu He, who acts as President Xi Jinping’s top representative on economic and financial matters.
The wording of the statement did not leave much leeway for cryptocurrency mining,” Li Yi, chief research fellow at the Shanghai Academy of Social Sciences, told the South China Morning Post. “When all mining activities are banned in China, it will be a turning point for the fate of bitcoin, as a large chunk of its processing power is taken out of the picture.
The Chinese government isn’t just worried about financial stability, either. A commentary piece in Xinhua News, the Communist Party’s official media outlet, elaborated on the government’s stance, voicing concerns about bitcoin’s role in money laundering, drug trafficking, and smuggling. It also mentioned bitcoin’s profligate energy use. Last week, China warned financial institutions not to participate in crypto-transactions or related services.
China isn’t the only country concerned about the role of bitcoin and other cryptocurrency in illegal activities. Late last week, the US Treasury Department announced that businesses must report cryptocurrency transactions greater than $10,000 to the Internal Revenue Service. “Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,” the Treasury Department said. And earlier this month, news leaked that three US agencies, including the IRS, the Department of Justice, and the Commodity Futures Trading Commission, were investigating crypto-exchange Binance for potential criminal violations. A significant portion of illicit bitcoin makes its way through the Binance exchange, according to a 2020 report by Chainalysis.
China’s hardening stance toward bitcoin comes as the highest-valued cryptocurrency is under increasing scrutiny for its outsize carbon footprint. Fewer than two weeks ago, Elon Musk announced that Tesla would no longer be accepting bitcoin to buy one of its electric vehicles. When Tesla’s bitcoin purchase policy was announced, the bitcoin cost of a Model 3 produced about 400 metric tons of carbon dioxide, compared with just 8.85 metric tons to make and drive the car over its lifetime. When Musk canceled the policy—a decision apparently influenced by Ars’ coverage—the Model 3’s bitcoin carbon footprint had swelled to more than 500 metric tons. “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions,” he wrote in a tweet.
The bitcoin network demands a staggering amount of energy. Today, it uses as much power as the Netherlands to maintain its normal operations. That load must be particularly obvious to the Chinese government, since a recent Nature Communications paper estimated that 75 percent of all bitcoin mining happens in China.
What was believed by many (including myself at one point) to be the way to free humanity from the Bankers, is turning out to be just another giant pump-and-dump scheme to fleece the hopeful who thought they could escape. Sure, there are stories of people becoming millionaires over night, but these are rare being that most people are holding bags and have been burnt quite badly.
But it seems Bitcoin, and eventually every other cryptocurrency, is going to be taken out by governments which the Bankers run. It was naïve for those of us in “the know” to ever think that they would have allowed an alternative system to pop up and give the People a way out of their debt-usury, slave system. All they have to do, and what they seem to be doing, to end this “financial revolution” is outlaw the use of these currencies, or things they rely on (such as mining), and they will knock out their competition, keep their power, and maintain the status quo, simultaneously, with just a stroke of a pen.
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