Can China Continue to Dominate Bitcoin Mining?
In a blog post, Cypherpunk Jameson Lopp has stated that China’s superiority in Bitcoin mining may not continue forever as several semiconductor chips are being created with focus on mining.
Lopp pointed out that China has a near monopoly on Bitcoin mining because most of the mining chip manufacturers are located in Asia where power is available at a cheap cost.
“Over the very long term I expect we will see semiconducter foundries outside of Asia begin producing more mining chips and countries with even cheaper power sources will continue to become more industrialized, thus providing more competition when miners are seeking out new locations to set up shop. China’s mining dominance is unlikely to last.”
Lopp pointed out that decentralized mining by mining pools ensures more control by standalone hashers.
In this regard, he highlights two ventures, namely Betterhash and Stratum V2, which are involved in further decentralization of Bitcoin.
In spite of China’s leadership over mining, Lopp trusts the country do not present a threat to Bitcoin.
Even if a government organization takes measures to end mining activities, there are so many independent players within and outside the country involved in mining activity.
Lopp further stated that bots for monitoring orphaned blocks do exist and any action against the network by a government authority or even a bad actor will get noticed immediately.
“It’s hard to imagine a scenario in which a state actor would be able to quickly and covertly seize enough hashpower to perform an ongoing attack that lasts more than a few hours. A worst case scenario in which state actors did seize all of the physical equipment could result in China only mining empty blocks and orphaning other blocks that did contain transactions, essentially halting all transaction confirmations on the network. Then it would become a game of either patiently waiting for them to give up or coordinating a code change that would make their hashing machines worthless.”
There are several countries who are trying to grab a share of Bitcoin mining market. Of late, the Iranian government endorsed a plan for mining considering the ample low cost electricity available in the country.