China continues to control 55% of the global Bitcoin network’s hashrate, despite a ban on crypto mining and trading that has been in effect since 2021.
According to CryptoQuant data, the country’s significant presence in Bitcoin mining persists, but its dominance is now being challenged as other countries, such as the US, increase their share of hashrate.
CryptoQuant CEO Ki Young Ju noted that US mining pools account for approximately 40% of the Bitcoin network’s hashrate. This share predominantly represents institutional miners, who leverage advanced technology and resources to maintain their competitive edge.
In contrast, Chinese mining pools continue to support smaller players in the region, demonstrating resilience despite ongoing legal restrictions on crypto activities.
China’s strict ban
China’s current stance on crypto is among the strictest globally. The country first took action in 2017, banning Initial Coin Offerings (ICOs) and shutting down domestic exchanges. This move was followed by its 2021 ban on mining and trading.
The crackdown aimed to curb the financial and environmental risks associated with digital assets. However, the decentralized nature of Bitcoin has allowed miners to find ways around the restrictions, maintaining China’s outsized influence over the global Bitcoin network.
Additionally, underground crypto trading markets continue to thrive in the country via VPNs and social media platforms, with the latest estimates placing the annual volume of crypto transactions in China at roughly $86 billion.
In parallel, the country has explored alternatives like the digital yuan, a central bank digital currency (CBDC) controlled by the People’s Bank of China (PBoC). The digital yuan is part of China’s broader strategy to maintain financial control while limiting the influence of decentralized cryptocurrencies like Bitcoin.
Calls for change
Meanwhile, industry leaders like Tron founder Justin Sun have urged China to rethink its policies on digital assets, particularly as the US positions itself as a global leader in crypto under former President Donald Trump’s pro-Bitcoin agenda. Sun argued that fostering competition between China and the US in crypto policy could drive significant advancements in the industry.
Meanwhile, there are indications that China may be softening its stance on crypto, particularly with its growing interest in blockchain technology and potential regulatory changes.
Recent reports suggest that China could consider revising its strict crypto regulations, especially in light of its actions in Hong Kong, which is positioning itself as a burgeoning crypto hub with implied support from Beijing.
While the official stance remains stringent, these developments point to a possible shift in China’s regulatory approach toward cryptocurrencies in the future. However, concrete changes have yet to be announced.
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