China’s attempt to stifle Bitcoin failed – here are three reasons

Bitcoin (Bitcoin) May have suffered the biggest coordinated attack in the past few months, but in this case, the investor community has not surrendered. China completely bans mining in most areas After two weeks of notification to BTC miners, this resulted in the largest single mining difficulty adjustment after the network hash rate dropped by 50%.

In Elon Musk announced that Tesla will Due to the environmental impact of the mining process, Bitcoin is no longer accepted for payment. It is not clear whether China’s decision was influenced by or related to Musk’s remarks, but these events undoubtedly had a negative impact.

A few weeks later, on June 16, China blocked cryptocurrency transactions from online search results.At the same time, the derivatives exchange Huobi begins to restrict margin trading and block new users from China.

Finally, on June 21, the People’s Bank of China (PBoC) instructed the bank to Close the bank account at the counter Even their Social network accounts are banned. Over-the-counter trading counters essentially act as legal gateways in the region, so without them, it would be difficult to convert Bitcoin into stablecoins.

As these events unfolded, some analysts were reluctant to describe these strategies as meaningless FUD, but in hindsight, China seemed to have launched a carefully planned and executed attack on the Bitcoin network and the mining industry.

Due to the collapse of Bitcoin prices and growing concerns about the possibility of 51% computing power attacks, the short-term impact can be considered a moderate success.

Despite the exercises, China’s offensive ultimately failed. The main reasons are as follows.

The computing power is restored to 100 million TH/s

After reaching a peak of 186 million TH/s on May 12, the Bitcoin network hash rate (estimation of total mining capacity) began to plummet. The first few weeks are due to restrictions on coal-fired power areas, which are estimated to account for 25% of mining capacity.

However, as the ban spread to other regions, the indicator bottomed out to 85 million terahertz per second, the lowest level in two years.

Bitcoin estimated hash rate. Source:

As shown in the above data, the processing capacity of the Bitcoin network recovered to 100 million TH/s in less than three weeks.Some miners have succeeded Transfer their equipment to Kazakhstan, although Others moved to Canada and the U.S.

The peer-to-peer (p2p) market continues

Although companies involved in crypto trading have been banned from entering the country, individuals continue to act as intermediaries – according to data from the exchange’s own ranking system, some of these companies have recorded more than 10,000 successful peer-to-peer transactions.

Huobi Global peer-to-peer market advertisement. Source: Huobi

Both Huobi and Binance provide a similar market where users can trade multiple cryptocurrencies, including USD Tether (USDT). After the fiat currency is converted into a stable currency, it can be traded on conventional or derivatives exchanges.

Asian exchanges still dominate spot trading volume

The full blow to Chinese physical transactions may be reflected in previous exchanges based in the region, such as Binance, OKEx, and Huobi. However, viewing the most recent volume data did not have a meaningful impact.

Weekly spot volume, USD. Source:

Please note how the three “Asian” exchanges maintained their dominant positions, while the trading activities of Coinbase, Kraken and Bitfinex are far from reaching.

China’s ban on Bitcoin mining and trading may cause some temporary problems and have a negative impact on the price of BTC, but the recovery of the network and price is better than many people expected.

At present, it is impossible to measure over-the-counter transactions in larger blocks, but it is only a matter of time before these intermediaries find new gateways and payment routes.

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