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Bitcoin is a perpetual motion machine. Bitcoin’s hash rate is slowly escalating to pre-ban levels in China, and service has continued uninterrupted without interruption. This is the power of good incentives. Dan Morehead, CEO of Pantera Capital, adds another factor to the equation. “Bitcoin network recovers 68% of hash rate drop attributable to our difficulty model due to Chinese bans – most likely in places with clean energy. “
The recovery is happening exactly as expected.
The # bitcoin The network recovered 68% of the drop in hash rate that the difficulty model attributed to the Chinese ban – most likely in places with clean energy.
The transition to renewables is underway.
September letter: https://t.co/xLyaLpPQQN pic.twitter.com/UsK9ML3BU8
– Dan Morehead (@dan_pantera) September 9, 2021
in a company newsletter, Pantera explains the argument:
“While it is difficult to know for sure, it seems very likely that much of the restart in mining energy is happening in places with cleaner energy than that used by Chinese miners.
The transition to renewables is well underway.”
In terms of bitcoin hashing, do concerns about environmental, social and institutional governance matter?
Here at NewsBTC, we have determined that Bitcoin mining in China tends to go to provinces with abundant green energy. Bitcoin stimulates this. Bitcoin hashing tends to go where energy is cheap. We’ve decided that too The environment does not seem to be the cause To ban bitcoin mining in China.
“The fact that the electricity used to mine cryptocurrency in Sichuan comes from clean hydropower meant that many believed the province would be a safe haven for bitcoin miners. With pressure mounting on local governments to cut carbon emissions, projects have been successfully closed in some other provincial-level regions – such as Xinjiang and Inner Mongolia – where mining was mainly fueled by coal.. ”
The only thing we can know for sure about the Chinese government’s plan is: the environment is not on their radar. They are shutting down these mining operations for other reasons entirely.
It is also important to remember that Chinese Bitcoin Retail dominance was already on the decline before mining was banned.
“according to obscure researchThe CBECI figures indicate that:
China’s share of total bitcoin mining capacity fell from 75.5% in September 2019 to 46% in April 2021 – before restrictions were imposed on Chinese miners. This number is significantly lower than the older estimate of 65%.
This is a sharp decline. Why did miners in China lose so much ground before the ban? “
But none of this invalidates Pantera Capital’s original hypothesis. “The transition to renewable energy sources is well underway.“That certainly appears to be the case. Bitcoin hash rate continues to rise.
BTC price chart for 09/09/2021 on Timex | Source: BTC/USD on TradingView.com
Does Halvin Bitcoin Implicitly Lower Energy Consumption?
Another interesting idea found in the mentioned leaflet is this one:
“Bitcoin has a built-in mechanism to reduce energy consumption over time. The number of bitcoins issued in a block reward every ten minutes is halved every four years. Other things being held constant, the amount of electricity consumed by bitcoin will be cut by 50% every four years. For comparison, the Paris Agreement only requires cuts of 7% every four years.”
Of course, when it comes to fiat currencies, the price of bitcoin fluctuates. So, the value of each bitcoin remains the same, but the price can – and usually – more than double. Although miners’ bonuses are halved, their profits may increase. This extra money could bring more competition and increased Bitcoin hashing with it.
With that in mind, Pantera poses:
“Perhaps the most realistic scenario is that if the bitcoin price were to double every four years in parallel with the halving — putting bitcoin at $320,000/BTC in 2032 — electricity consumption would not be greater than it is today.”
Enough about the bitcoin hash, how about the price?
Another point the newsletter makes is this.”This is China’s third ban on bitcoin. The inverse hexagon still works – the price has increased by 57%. “
Related reading | New to Bitcoin? Learn How to Trade Cryptocurrencies with NewsBTC Trading Course
Is this a bullish sign? The price of Bitcoin has “only” risen 57% since the Chinese mining ban sent Bitcoin hashing into a death spiral for a few seconds. Bitcoin paid the price and resisted vandalism like a champ. We are not sure if the ‘inverse hexagram’ can be considered reliable information, but…maybe this is a bullish signal?
Featured Image by Diana Polekhina on Unsplash - Charts by TradingView and Pantera Capital
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