Bitcoin (BTC) may have experienced the largest coordinated attack in two months, but this time the investment community has not capitulated. China has categorically banned mining in most regions after warning BTC miners for two weeks, causing the largest adjustment in mining complexity after the network hashrate fell by 50%.
Market sentiment around bitcoin has already been damaged after Elon Musk announced that Tesla will stop accepting payments at BTC due to the impact of the mining process on the environment. It is not known whether it affected China’s decision or was due to Musk’s comments, but those developments certainly had a negative impact.
A couple of weeks later, on June 16, China has blocked cryptocurrency exchanges in web search results. Meanwhile, there is an exchange of cryptocurrency derivatives Huobi began restricting leverage operations and blocked new users from China.
Finally, June 21st The People’s Bank of China (PBoC) has instructed banks to close their bank accounts at over-the-counter tables, and even their social media accounts have been closed. OTC tables essentially act as a stop for Fiat in the region, so without them it would be difficult to switch bitcoin to stable coins.
As these events unfolded, some analysts did not want to describe the tactics as anything other than a pointless FUD, but in retrospect, It looks like China has launched a very well-planned and executed attack against the Bitcoin network and the cryptocurrency mining industry.
The short-term impact can be considered a moderate success due to the collapse in bitcoin prices and growing concern that a 51% attack on the network could occur.
As for bitcoin mining and China, I wouldn’t believe anything you hear. I do not rule out the possibility that the Chinese Communist Party is trying to organize a 51% attack on the Bitcoin network. Stay vigilant.
– Danny Diekroeger (@dannydiekroeger) June 25, 2021
As for bitcoin mining and China, I wouldn’t believe what I hear. I do not rule out the possibility that the Chinese Communist Party is trying to organize a 51% attack on the Bitcoin network. Be alert.
Despite the maneuvers, China’s attack eventually failed, and here are the main reasons.
The hashrate recovered to 100 million TH / s
After reaching a high of 186 million TH / s on May 12, the Bitcoin network hashrate, an estimate of total mining capacity, began to fall. The first two weeks were due to restrictions in coal mining areas, which are estimated at 25% of the network’s total hash capacity.
But still, As the ban was extended to other regions, the figure reached a low of 85 million TH / s – the lowest level in two years.
As the above data show, the computing power of the Bitcoin network has grown to 100 million TH / s in less than three weeks. Some miners have successfully moved their equipment to Kazakhstan, others have moved to Canada and the United States.
P2P markets continued to operate
Although companies involved in cryptocurrency transactions have been banned in the country, people continued to act as intermediaries, some of whom recorded more than 10,000 successful peer-to-peer transactions, according to the data of each exchange’s own classification system.
So much Huobi What Binance offer a similar market in which users can buy and sell multiple cryptocurrencies – a stable currency Tether (USDT). After converting your fiat into a stable currency you can trade on a regular exchange or exchanges.
Asian stock exchanges continue to dominate spot volume
A complete ban on trading by Chinese organizations is likely to be reflected in exchanges that previously had headquarters in the region, such as Binance, OKEx and Huobi. However, looking at the latest volume data, there was no significant impact.
See how the three “Asian” exchanges continue to dominate the market, while Coinbase, Kraken and Bitfinex are not approaching their trading activities.
China’s ban on bitcoin mining and transactions may have led to some temporary disruptions and negatively affected the BTC account, but the network and price have recovered better than many expected.
There is currently no way to measure OTC transactions in which large amounts are traded, but it is only a matter of time until these intermediaries find new gateways and payment methods.
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