23 May 2022
China failed to ban bitcoin mining
China banned bitcoin mining in June 2021, but new data suggests that the country still hosts a large bitcoin mining industry. Does this prove that banning bitcoin mining is impossible?
Cambridge has updated their Bitcoin mining map, showing that Chinese miners produce 21% of Bitcoin's hashrate even though the activity has been banned there since June 2021. This hashrate share corresponds to a significant decline from the 46% in April 2021, before the ban.However, it still shows that a substantial amount of the Bitcoin hashrate is illegally produced in China, proving that banning bitcoin mining is no easy task even for one of the world's most authoritarian governments.Why has China failed in banning bitcoin mining? Although political power is very centralized in China, the country's vast size makes it challenging to implement a ban on bitcoin mining, which is often done in very remote locations where there is excess energy available.In addition to being challenging to implement due to the remote nature of bitcoin mining operations, the ban also clashes with local economic interests. Like most big countries, China has a lot of stranded energy resources, and local government officials are heavily incentivized to cooperate with miners in monetizing this excess energy by mining bitcoin.When one of the most top-down controlled governments in the world fails to ban bitcoin mining, it proves that banning the industry is extremely difficult. China has attempted to ban Bitcoin nine times before, targeting financial institutions, crypto exchanges, and miners. This is just the latest failure in their increasing streak of Bitcoin ban attempts.