The Chinese monopoly position in Bitcoin mining will be dissolved sooner or later
More and more often people tell me that Bitcoin will not work. My answer, of course, is “Why?” The answer is — the mining is mainly in China and if the government bans or confiscates it, Bitcoin is over.
The crypto expert Jameson Lopp considers the end of the Chinese monopoly in Bitcoin mining to be foreseeable.
The Chinese monopoly position in Bitcoin mining will be dissolved sooner or later, as more and more chip manufacturers enter the mining market and other countries also offer cheap electricity, according to crypto expert Jameson Lopp.
In his corresponding blog entry, Lopp first notes that China holds the monopoly position over Bitcoin mining mainly because most of the chip manufacturers specializing in crypto-mining are located in the Middle Kingdom and the electricity costs are particularly low here.
“In the long term, chip manufacturers outside Asia will produce more and more mining chips and countries with low electricity costs will become more industrialized at the same time, which will allow crypto-miners to move to other locations. It is unlikely that the Chinese mining monopoly will last forever.”
The more decentralized the mining is, the more influence individual crypto-miners have, Lopp explains. In this context, he refers to Batterhash and Stratum V2, two projects that are already driving the decentralization of Bitcoin mining.
Even though China currently has a clear monopoly position, Lopp does not see this as a major threat to Bitcoin. Even if the Chinese government were to put the country’s entire mining capacity under its control, the Bitcoin network would be too large by now to allow an unnoticed takeover. Any such attempt would be noticed immediately. So Lopp says:
“It’s hard to imagine that a government could take over enough mining capacity at a moment’s notice to launch an attack on the Bitcoin blockchain that would last more than a few hours. If the Chinese government were to take over the entire mining capacity, it could, in the worst case, prevent transactions from being processed on the network. The Bitcoin community would then have to sit this one out or they could agree on a new programming code that would render China’s mining devices useless.”
Other countries are now also looking to get their piece of the mining market, for example, the Iranian government recently adopted a national strategy for crypto-mining, which could pay off due to the country’s low electricity prices.
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Why China will not keep the BTC Mining monopoly much longer? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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