A few news sources and data from the Bitcoin network suggest that some of the formerly Chinese Bitcoin miners have returned online. China banned Bitcoin mining in the summer of 2021. It appears that the miners who fled China are now settled in new countries. According to reports, some miners have relocated operations into countries like the USA, Russia, and Kazakhstan. The relocation is ongoing.
According to Forbes
“Bitcoin hashrate has recovered about 85% from its low point in July after China’s ban, which demonstrates the extreme volatility caused by the crackdown. The network saw its largest ever downward adjustment, 28% in July, when its hashrate was at its lowest level for 2021 at 84.79million terahashes, (TH/s).
The author states that the rise in hashrate is not likely to be due to Chinese miners going online. It may also be caused by US-based miners who bring new rigs online.
Chinese Authorities
Chinese Authorities Lose an Industry. After having tolerated Bitcoin for nearly a decade, the Chinese government began hacking away at its Bitcoin industry and cryptocurrency industry for a few decades. It is not secret that the CCP loves being in control. Decentralized currency is clearly viewed as a threat.
The cryptocurrency industry is hot. Many people use cryptos as money around the globe. Cryptos are a great alternative to fiat currency, especially in areas that aren’t reliable.
Pride, as it is said, comes before the fall.
China’s recent ban on Bitcoin mining is evidence that Beijing is more interested in controlling Bitcoin than it is in actually controlling the first decentralized currency. This may be even more important given the CCP’s weak economy and high inflation.
The Dollar Gamble Goes Bad
After witnessing how 1998 Asian Financial took down the “Asian Tigers”, the CCP devised a simple way to stop the Western money masters doing the same to their country.
Use a USD peg. This is considered manipulation of a currency, unless it receives the blessing of the central bank, such as Japan or Hong Kong. However, it made a lot sense at the time.
Although the Chinese didn’t use a fixed peg, the PBoC intervened in FOREX to maintain the Yuan at a level which makes Beijing logical for more than 20 years. The job of the PBoC was easy because the PBoC could keep the CCP’s Yuan at any level it wanted due to the huge influx of US Dollars.
However, there is one problem: any currency that is pegged (hard- or soft-) will have to deal the inflation in the currency used as the base. Now that USD inflation has exploded, Beijing’s move to convert its currency to USD twenty years ago is no longer smart.
The Inflation Problem and Bitcoin
Is inflation likely to decline in the near future. We don’t believe so, but anything is possible. China’s CCP will face serious problems if inflation doesn’t drop in the next few weeks. Despite all its rhetoric, the CCP has only moderately succeeded in lifting its population out of poverty.
The majority of the work was done by free market reforms, which are currently being reversed at a rapid rate. Rising food costs and a stagnant economy worldwide spell misery for the poor of China or anywhere else. The CCP’s core problems will not be solved by removing the Bitcoin mining operation in China. It shows how obsessed the CCP has become with control and how that obsession can’t be translated to anything in the real world.