PayBito Chief dismisses ‘Chinese financial weapon’ claim

The world is genuinely interested in China. Now, more than ever. Before 2020, the world was blown away by the sheer cuteness of articles delivered from China. Oh, the deal of convenience that comes per dollar! But a lesson was learned post-Wuhan’20. Now the tiniest move by the Chinese Government sounds the red alert. Who knows, what they’re planning next?

BACKGROUND

China has long since been the largest miner of cryptocurrency – contributing to 71.7% of the world’s mined crypto. At the same time, Beijing never recognized cryptocurrency. The cryptocurrency trading ban of September 2017 forced Binance, initially based in Shanghai, to move base to Japan.

Cut to 2021, Inner Mongolia – an autonomous province in Northern China, announces the closure of multiple cryptocurrency mining projects. It is to be noted that from September 2019 to April 2020, Inner Mongolia alone accounted for 7.71% of the world’s crypto mining owing to the availability of inexpensive power from coal reserves in the region. In contrast, the bitcoin computing power generated by all of the United States was only 5.29% over that same period. The Government sources cited “massive carbon footprints” from “power-hungry practices” of cryptocurrency were not “sustainable”. Thus indicating a move towards greener ecosystems.

Also Read: Africa: A Global Crypto Hub: En Route Financial Liberation

In reality, Chinese authorities perpetuated the move to re-align the crypto-mining farms near more stable mines of Xinjiang as is clear from the statements of one of China’s top mining pools.

Only days ago China declared the launch of their digital currency – the digital Yuan, but dismissed the prospect of a global launch; maintaining that internal circulation of the currency was of prime focus.

Japan Times perceived this move to be one challenging the US Dollar. The strengthening of the Chinese Yuan over the past year, against the US Dollar, offers unmistakable glimpses of a strategy.

AS IT APPEARS

With a large computing power fuelling a huge number of mining rigs, it is quite apparent the immense power of Bitcoin is slowly but steadily passing into the hands of the Chinese. And the billions invested by major corporate firms, now riding on the crypto, are at risk of running into a Chinese Debt Trap.

However, this also raises a potent question regarding crypto-mining: Why are the other nations so laid-back about crypto-mining?

Raj Chowdhury, Founder, and CEO of PayBito quizzes, “ If the sheer volume of mined cryptocurrency could spark off a shift of power, why have the other so-called developed nations been so indifferent towards the activity?”

CRYPTO MINING

Crypto Mining involves a painstakingly expensive, power-consuming, and complex network of computers (called rigs) trying to determine if a certain quantity, say 1 MB, of transactions, are legitimate. Sometimes mining large quantities of Bitcoin rewards the miners with Bitcoins or a fraction of the same.

The rigorous effort, number-crunching software working hard at cryptocurrency equations, power-thirsty rigs, and yet no gain without a wee bit of luck. This sums up the whole deal of crypto mining, which the economic superpowers shy away from.

Also Read: Bank of England and HM Treasury Unite on CBDC Goals

SO, IT BOILS DOWN TO…

As Raj Chowdhury sums up, “The investments of power(electric), capital, and industry are indicative of a progressive economy. The measurement of the reward is in terms of any financial instrument, digital or sovereign. This certainly does not serve to tip the balance of international politics.”

Most countries would bypass the ordeal to take a short route by simply purchasing a coin. Investments, in power(electric), intelligence, and manpower are indeed rewarding if consistent. This is evident from the scenario. This under no circumstance, holds the sole potential to wield an inordinate proportion of political power.