Bitcoin runs on a Proof-of-Work (PoW) algorithm and needs computing power to keep its network running. Due to the capacities provided by miners, all transactions within the network are processed.
However, the Bitcoin network can be closed “quite quickly”, which will lead to the “shutdown” of the main cryptocurrency, Co-founder and CEO of blockchain company Electric Capital Curtis Spencer is sure, writes RBC Crypto.
According to him, governments are able to stop all mining farms, but the authorities do not do this, since they support the cryptocurrency and allow it to develop.
Curtis Spencer recalled the recent drop in the bitcoin network hash rate to its lowest level since October last year, which occurred due to the shutdown of mining farms in the Chinese province of Xinjiang. On April 20, according to the analytical service Bitinfocharts, the network hash rate of the first cryptocurrency dropped to 98.53 EH / s. As of April 22, it is 114 EH / s.
Governments do not support bitcoin, but simply do not strongly hinder it, since they are interested in the existence of independent, often shadow, channels for transferring funds, says Maxim Krupyshev, CEO of the Coinspaid crypto exchange. According to him, such channels are used to finance intelligence units and participate in various military conflicts.
“Do not forget about the financial lobby: participants in the largest stock markets are unlikely to be interested in losing such a profitable instrument,” the expert added. He noted that the government of any country is not a single organism, but a community of many groups with their own interests.
Jahon Khabilov, CEO of the Sigmapool mining pool, shares the same opinion. He claims that about 80% of the hashrate of the bitcoin network is accumulated in Iran, the United States, China and Russia. In today’s world order, the probability that all these powers “turn off mining” tends to zero, Jakhon Khabilov emphasized.
Events in Turkey
On April 16, Bitcoin fell 5% amid news about the introduction of a ban on the use of cryptocurrencies to pay for goods and services in Turkey. The Central Bank of Turkey said that cryptocurrencies are not subject to control and supervision, which creates security risks and possible losses.
These actions of the Turkish authorities have nothing to do with the attitude towards bitcoin and its place in the financial system, the CEO of the Sigmapool mining pool expressed confidence. In his opinion, the restrictive measures are associated with the weakening of the Turkish lira, high inflation, political unpredictability, as well as problems in the economy that were caused by the pandemic. Moreover, Turkey has never been a mining center, since the country is experiencing an acute shortage of electricity, Jahon Khabilov said.
Reallocation of capacities
To completely “turn off bitcoin” all states need to reach a consensus on the prohibition of mining, says Maxim Krupyshev. Here you need complete unanimity of all countries of the world, and this is hardly possible, there is no unanimity even within one government, let alone the ability of all states of the planet to agree on a ban on bitcoin, he added.
“If a ban on mining is introduced only by one country or a group of countries, then there will simply be a redistribution of mining capacities in the world, migration of miners to other regions,” the expert noted.
If we assume that the United States will impose a complete ban on mining, then cryptocurrency mining enterprises will immediately begin to look for regions where equipment could be transported, explained the CEO of the Coinspaid crypto exchange. In such conditions, many countries will rush not to prohibit, but, on the contrary, to offer miners favorable conditions so that enterprises relocate to them, as this will allow them to seize the position of the leader in the mining market.