Over the last couple of weeks, the Bitcoin Cash network has recorded an increasing number of unknown mining pools who sign their coinbase transactions with the name of Satoshi Nakamoto.
Two possible scenarios
Experts believe that behind these miners may be supporters of the cryptocurrency Bitcoin SV. They might be trying to profit from BSV price increase. Experts point out that the main advantage for them is to withdraw funds from BCH to BSV. This will lower the Bitcoin Cash price and increase Bitcoin SV’s price.
According to another version, the miner’s activity may be due to an attempt to discredit blockchain Bitcoin Cash through reorganization attacks. Not so long ago the Bitcoin SV blockchain experienced a reorganization. Back then, disproportionately large block sizes caused the problem.
However, experts do not rule out the fact that the new computing power belongs to the Bitcoin Cash camp itself. They claim that it might be a security measure to protect the network from the so-called hashrate wars.
Currently, “Other mining pools” control 37% of the Bitcoin Cash network which is the largest share of the whole network. BTC.com comes second with 21,2%
Additionally, in March, ChainDD announced that 74.48% of the bitcoin network hashrate is controlled by six alternating pools, half of which are directly or indirectly controlled by the Chinese company Bitmain.
In recent news, China’s National Development and Reform Commission (NDRC) has added Bitcoin mining to its draft list of industrial activities that the agency is seeking to stop. This list, however, is live since 2011, but only now they added proposals of cryptocurrency mining ban. This has started a massive FUD (Fear Uncertainty Doubt) on the price and future of Bitcoin since China accounts for almost 70% of Bitcoin mining hash rate.
Bitcoin mining wastes resources and pollutes the environment
The agency has ruled out this draft proposal to the public and asks for additional comments until May 7. It lists out thousands of industrial businesses in three categories: Promoting, Restricting and Eliminating. Cryptocurrency mining has been categorized as “business that is recommended to be eliminated” and is grouped with other activities that produce high levels of pollution. However, a Twitter user @DoveyWan who is considered to be a legit source of information eases everyone by saying that this is only a proposal and actual implementation could be “tens of years down the road”.
He refers to a similar list China released in 2011. The 2019 draft still contains many proposals from 2011. He points out that many of the proposals from 2011 still haven’t been eliminated today.
Additionally, the belief that Bitcoin mining pollutes the environment is not as bad as previously reported. A report from CoinShares in late 2018 states: “based on historical data on energy mix and locations of cryptocurrency mining operations in China, we have shown that contrary to the common narrative, the vast majority of global Bitcoin mining capacity (minimum 77.6%) is running on renewable energy.”
While this is only a draft proposal, it is worth mentioning that Bitcoin mining in China is the largest portion of Bitcoin mining as such in the whole world. According to CoinDesk approximates, China’s southwestern region could hold around one million mining machines.
Moreover, China is the home for many top crypto-mining pools such as: BTC.com (17,6%), AntPool (13,9%), F2Pool (9,8%), Poolin (8,9%), BTC.top (7,7%), ViaBTC (7,6%), Dpool (3,9%).
Overall, China accounts for almost 70% of the Bitcoin hash rate.
Why China? China has one of the cheapest cost for electricity in the world. However, according to Anthony Pompliano, the companies and people of China “are investing more in mining today than ever before. And that doesn’t look like it will stop anytime soon.”
Not only about polluting the environment
As Anthony Pompliano writes, he thinks this is not only about Bitcoin being a massive threat to polluting environment. He refers to China as a “notorious government” which will ban everything that is not in their control. As we all know, China banned Facebook and Google due to a reason of centralization.
“..the government has prevented centralized, for-profit companies from entering the country. In this case, the government would be waging a battle against a decentralized network by attacking the infrastructure necessary to run the networks,”
writes Anthony Pompliano.
Moreover, Pompliano rules out numerous questions that asks for an answer in this particular situation:
“If they ban commercial mining activities, would they also ban individuals from running the Bitcoin software on their personal computers? Would they ban miners only if they are using non-renewable energy sources? Could miners continue only if they agree to pay high rates of tax or evolve their operations to become government-sponsored? What type of enforcement would be implemented if the recommendation was to discontinue mining activities?”
It sure looks like this issue has more questions than answers and this is still an open discussion until May 7.