China crackdown shows industrial Bitcoin mining a problem for decentralization
The great hash rate plunge caused by an exodus of miners from China shows large scale Proof-of-Work mining facilities are vulnerable to regulation.
June 30, 2021
Bitcoin’s reliance on large-scale mining infrastructure and geographic concentration has been thrown into sharp relief by China’s recent mining crackdown. In May, China announced that it would be getting tough on crypto mining and trading as a response to financial risks. The nation’s crackdown on crypto is not new, rather it's a reiteration of previous standings on the risks of digital currency to economic stability, in response to recent price fluctuations.
For the first time, cryptocurrency miners are being targeted to enforce the existing guidelines. Mining hardware still presents a potential risk, even if mining moves to other locations. This could prove that the Ethereum blockchains switch to proof-of-stake (PoS), which can run on consumer-grade equipment, is a more reliable path to decentralization and offers greater resilience against such risks.
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