Advertisement
Bitcoin
TechBig Tech

Explainer | China’s bitcoin crackdown: why is it happening and what’s next for the original cryptocurrency?

  • China’s widespread crackdown on bitcoin has sent the hash rate plummeting, but miners leaving the network have also pushed up profitability
  • Bitcoin was designed to be the world’s first decentralised currency, outside the reach of any central bank, but it now more closely resembles a commodity

Reading Time:6 minutes
Why you can trust SCMP
0
China’s crackdown on bitcoin has sent shockwaves through the global mining community, but as miners flee the country, some cryptocurrency faithful remain optimistic about its future. Photo: Reuters
Matt Haldane
Bitcoin, the world’s first and most popular blockchain-based cryptocurrency, has seen a wild year. After investment fervour pushed prices past US$63,000 in April, its value then plummeted by more than 40 per cent.

Beijing, concerned by the volatility, announced another crackdown on the cryptocurrency. This time, it went after a practice previously assumed to be safe: bitcoin mining.

Local governments across mainland China have responded by pushing out cryptocurrency miners, forcing some of these enterprises to seek a new home overseas.

Experts previously raised concerns about China’s influence over the bitcoin market, since it accounted for 65 per cent of the decentralised network last year, but a declining share of mining is changing that situation.

Here is everything you need to know about bitcoin and what China’s crackdown means for the future of the cryptocurrency that started it all.

What is bitcoin?

Born in the wake of the 2008 financial crisis, bitcoin was designed by an anonymous person or group, known only as Satoshi Nakamoto, as a peer-to-peer digital currency free from any central authority.

Advertisement