Crypto mines restored in China, despite a prohibition
Last summer, China increased its enforcement of strict crypto rules, including the country’s large crypto mining business. As a result, the overall mining power of the Bitcoin network was slashed in half in only a few weeks when thousands of Chinese miners disconnected. However, less than a year later, Bitcoin’s mining power is at an all-time high. Shockingly, research reveals that the world’s second-largest economy is once again a top crypto mining center. What caused this to happen? Circumventing the mining restriction isn’t the only way Chinese civilians exploit crypto technology and NFTs to oppose censorship. Let’s get started.
- Following China’s crackdown, the United States has surpassed China as the leading mining hub, housing roughly 40% of worldwide miners. Despite the embargo, mining in China has continued and maybe even rebounded, accounting for approximately 20% of global mining activity. Because the worldwide Bitcoin network is permissionless, guerilla miners appear to have found ways to evade discovery, including employing off-grid electrical sources like hydropower produced by local dams that aren’t linked to the primary grid.
- According to reports, Chinese individuals utilize NFTs to avoid censorship by storing sensitive information, such as “Voices of April,” a massive collection of social postings, films, and other media chronicling people’s experiences of severe COVID lockdowns in Shanghai. Because NFTs can confer data ownership but do not store the data, activists are turning to decentralized web protocols such as Filecoin’s InterPlanetary File System (IPFS), which distributes numerous copies of a file over a decentralized global server network.If a sensor removes one copy, many more remain available. IPFS can also be used to get through China’s “Great Firewall,” allowing locals to read millions of books, scientific articles, and forbidden publications. (Even if you live in a less restricted nation, keeping a copy of your NFT data on IPFS is smart.)
- Cloudflare, which manages some of the world’s most critical Internet infrastructure, has unveiled new capabilities allowing customers to host and serve content on IPFS. IPFS developers also announced a collaboration with military contractor Lockheed Martin to host decentralized web nodes on satellites circling the Earth, enabling quick space-to-space data transfers without needing to beam the signal to an earthbound server. Decentralized IPFS servers now contain around 2.5 billion gigabytes of extremely censorship-resistant data. That’s the coequal of tens of thousands of Wikipedia copies.
- What was the impetus behind China’s crypto network ban? Bitcoin is often regarded as a challenge to China’s control over many areas of people’s life because, as an open-source and decentralized monetary system, it presents a censorship-resistant option to China’s new central-bank-issued digital currency, the digital yuan. The digital yuan has thousands of millions of users and has already been used in commerce worth billions of dollars — and, unlike Bitcoin, it provides Chinese authorities complete insight over users’ money.
What it means… According to one central economic freedom rating, China ranks 158th out of 177 nations – so it’s not unexpected that Chinese policymakers are averse to decentralized, censorship-resistant, and borderless crypto networks. However, unlike all of the centralized “Web2” behemoths — from YouTube to Wikipedia — that have been successfully blocked by China’s Great Firewall, crypto and the decentralized web (also known as “Web3”) are much more difficult to restrict.