Bit Digital Inc., a Nasdaq-listed firm based in New York, has upped its efforts to move over 20,000 machines from China, it has been learnt. These high-powered computers are at the core of the New York-based firm, which makes its money by tapping them into cheap electricity sources so they can crack mathematical problems and unlock new bitcoin. Despite being the world’s largest bitcoin mining hub, China has intensified its stranglehold on cryptocurrency mining and trade. China mined two-thirds of the world’s bitcoins in 2020; in other words, until last year, Chinese bitcoin mining accounted for around 65 percent of global mining.
To power mining activities in China, electricity is generated from massive dams, experts on the subject pointed out. It has been learnt that the majority of bitcoin is mined in Xinjiang, where Beijing has waged a brutal onslaught against Uyghur Muslim minorities.
Furthermore, the Chinese have subsidised hydropower, making bitcoin mining even more affordable in China when compared to other regions of the world. However, Bitcoin mining uses a lot of energy, at 112.57 terawatt-hours each year. In other words, cryptocurrencies come at a high environmental cost. China alone would have emitted 113 million metric tonnes of carbon dioxide if the crackdown on cryptocurrencies had not been undertaken. It’s worth noting that China has always prioritised economic growth over pollution prevention, has repeatedly declined to invest in green alternatives, and runs the majority of its industrial infrastructure on coal or hydropower. The “environmental” justification for the recent crackdown on cryptocurrency is a charade, according to experts on Chinese economy.
The Chinese Communist regime has a tight grasp on every area of its citizens’ life, and thus bitcoin’s decentralised and undetectable aspect does not sit well with Beijing. The Communist Party’s model of governance, which is essentially autocratic and tyrannical, is alien to the ostensibly freewheeling world of cryptocurrencies.
In 2017, the country proscribed all crypto currency trading platforms from converting cryptocurrencies into legal tender and vice versa, along with shutting down all Initial Coin Offerings (ICOs). Inner Mongolia, one of China’s leading mining hotspots, accounts for 8% of global bitcoin mining. The region has proposed punishments for companies & individuals engaged in bitcoin minings; companies could have their business license annulled if they are found to be involved in the mining of cryptocurrencies.
The Chinese government’s abrupt onslaught on Bitcoin is therefore driven by the fact that cryptocurrency represents a fundamental threat to state monetary sovereignty, according to one of the above mentioned experts. The greater the popularity of cryptocurrencies among Chinese citizens, the less authority Beijing has over monetary policy. If a government’s political legitimacy isn’t acquired via elections, it must be obtained through other means, such as economic achievements. The Communist Party’s political acceptability in China is predicated on the country’s economic growth. Any threat to economic stability and development, or the financial system that sustains it, is a threat to China’s political structure as well.
Instead, China has come up with its own version of state-backed digital currency, the “digital yuan,” which would eventually give the Communist regime absolute control over every penny spent by Chinese citizens. In other words, the CCP has adopted blockchain technology without decentralisation, and hence according to Beijing the state-backed digital currency overcomes one of bitcoin’s primary downsides- the user’s obscurity.
The cornerstone to the Communist Party’s incontrovertible hegemony is complete control over the flow of ideas, money, and information. The unregulated world of cryptocurrencies represents a threat to the tyrannical communist regime’s dominance, experts feel.
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