China lost its chance to control 50% of Bitcoin (BTC) hashrate
China is facing its worst energy shortage since 2011. The fact that this information slipped under the radar may be the reason for the sudden ban of Bitcoin mining.
Not enough energy to mine Bitcoin?
The news of the mining ban issued by the Chinese Communist Party, which celebrated its 100th anniversary this week, has been making the rounds for weeks now. Judging from the hashrate drop that followed, it appears that China used to host at least 50% of BTC miners. It doesn’t come as a surprise, however — Bitmain, Canaan Creative and Ebon International, which control almost 90% of the market, are all Chinese.
Last week we thought that it was more important for the CCP to leave no way of escaping its totalitarian social engineering system: the social credit score and the CBDC digital yuan being its pillars, than to dethrone the dollar by supporting Bitcoin.
In light of newly discovered information, it appears that China could simply no longer afford to host half of the world’s Bitcoin hashrate. In any case, this is what the energy crisis the country is going through suggests.
The worst crisis in a decade
Several provinces have been facing electricity shortages for several weeks, including Guangdong province, responsible for 1/4 of all exports and more than 10% of the nation’s manufacturing. This industrial powerhouse of a city has been rationing electricity for more than a month, forcing some businesses to halt production for several days a week.
Slated to continue till the end of the year
Almost 1/3 of Chinese provinces are going through the same ordeal — including the manufacturing hub of Zhejiang and the Yunnan province, which used to host a large number of BTC miners who had been taking advantage of the cheap hydroelectric power in the area. However, as the water supply has recently been reduced due to droughts, the electricity production has declined.
The decline in electricity production in the Yunnan province, the main hub for the country’s metal industry, has subsequently led to a decline in the production of aluminium, which requires a lot of electricity. Among other signs of the crisis, we can take a look at the China Purchasing Managers Index (PMI), which has been falling for three months in a row. The Production sub index has even fallen to its lowest level since March 2020.
The authorities have warned that this situation might last until the end of the year, suggesting that the country’s energy problems are far from over.
Economic war, heat waves and climate change
Biden’s arrival at the White House has not moved Uncle Sam’s foreign policy one bit. The trade war continues, with Australia joining the standoff. Beijing’s ban on Australia’s coal imports has also played its role in the crisis.
The result is a rise in prices (140% jump in one year) causing Chinese coal fired power plants to reduce output as the government refused to raise the price of electricity.
At the same time, demand is at its peak due to the heat wave, which made air conditioners and refrigerators work overtime. Iran, which is facing the same problem, has also banned Bitcoin miners from operating for the next six months for fear of blackouts.
In addition, China’s President, Xi Jinping has pledged to strive for carbon neutrality by 2060. This decision puts the burden on the coal energy industry, which is responsible for 60% of the country’s electricity. China imports nearly 300 million tonnes of coal per year.
Finally, the International Energy Agency expects the Chinese electricity demand in 2021 to increase by 12% compared to the 2019 level. The demand has already risen by 20% in South China since the start of the year.
In other words, China had no other choice but to relocate its BTC mining industry, whose 70 terawatt-hours represented half the consumption of a city like Shanghai.