Chinese crypto mining retreats to secret operations
Following the recent crypto crackdowns in China, stealth mining and mystery hash rate have returned
China’s moves against crypto miners are not killing the country’s DeFi, but have instead created a US Prohibition Act scenario. Mining is not ceasing, but instead moving onto illegal organizations.
While there are no numbers on how much hash rate has moved from the Chinese pools, and in fact, there are no perfect methods of measurement so far, it is clear that the decline is significantly cushioned by the enormous increase of unknown pools.
Still, overall hash rate has dipped, as far as analysts can tell. China started its series of crackdowns in Inner Mongolia, Xinjiang and Qinghai, stating environmental concerns as the reason. Many experts had already assumed the government to have a higher motivation to counter cryptocurrencies, since their highly advanced CBDC project, the Digital Yuan, is aiming to replace the Dollar as the most powerful currency. It therefore makes sense from a Machiavellian point of view to fight any DeFi competition to strengthen the centralized flow of money.
The most recent move in Sichuan, where most mining power was drawn from hydro plants, was a sign for many that these assumptions were correct.
Despite strict surveillance, an increase of mystery hash rate was reported by Bitcoin.com. Since the crackdowns, the hash rate distribution was cut nearly in half. On June 2, it stood at around 191 exahash per second, since then it has dipped below one hundred several times, now balancing at the three-digit threshold.
Mystery hash rate is now the seventh largest contributing pool of bitcoin in conglomeration. Miners refrain to VPNs and proxy services to disguise their identity. Throughout 2020, these pools, a rampant phenomenon in the first years of blockchain, were nearly wiped out, while at the current time, it makes up about a tenth of the overall hash rate.
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