Bitcoin Hashrate Becomes Geopolitical Topic Between US And China

Democrat President Joe Biden surprised many onlookers in the US by simply continuing the frosted relationship with China that had started to freeze under his predecessor, the Republican President Donald Trump.

One of the issues at stake is the fact that the US dollar is losing its status as the world’s preferred reserve currency and that the Chinese Renmibi is growing in importance as it carves a place for itself in Asia.

Chinese President Xi Jinping is growing goodwill with neighboring countries by lending to them massive sums to prop up their ailing economies, hurt by the Covid-19 pandemic.

As the Digital Yuan will be launched next year and introduced to the world during the 2022 Winter Olympics in Beijing, it is thought that crypto will also become more important.

This is quite noticeable in the global fight for who controls the hashrate of Bitcoin.

Quintillion

According to data from the Cambridge Center for Alternative Finance, China accounted for 65% of the Bitcoin hashrate back in April 2020 (already a serious drop from the 75% it still controlled back in September 2019).

At that moment, the United States (7.24%) and Russia (6.90%) were fighting for second place. Back then, the total Bitcoin network hashrate was 115 EH/s (with 1 EH/s being 1,000,000,000,000,000,000 or one quintillion hashes per second).

However, between April 2020 and January 2021, the hashrate increased by 35 EH/s to reach 150 EH/s. China was therefore left with only 50% of the computing power due to the significant progress of its rivals. Iran and Kazakhstan now own 8% and 9% of the network’s hashrate, respectively, and the US more than 10%.

Indeed, the digital asset mining sector has been booming in recent months. Iran has passed a full body of legislation allowing power plants to mine Bitcoin. This measure prompted Chinese miners to relocate their installation in the country. The same goes for Kazakhstan, which has more flexible regulations than the Middle Kingdom.

The hashrate exodus from China to other countries in Asia is in part due to the change in China’s internal mining policy. Indeed, since the summer of 2020, China has removed some of the benefits bestowed on miners of digital assets, including cheap electricity. A decrease in mining dominance in China just means the network is becoming more decentralized.

In addition, this would prevent hardware failures from impacting the price of Bitcoin, as was the case with the interruption of mining in Xinjiang seen recently. But beware of the growing importance the US now also plays in the control for Bitcoin’s hashrate. As the dollar’s importance drops and analysts point to the growing importance or crypto, prepare for control of Bitcoin to become a geopolitical topic between superpowers.

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