White House Memoirs Explode Again: Trump Favored Bitcoin and Ethereum, Ignored China's Majority Hashrate Control

Former White House National Security Advisor John Bolton wrote in his unpublished book that President Trump instructed Treasury Secretary Steven Mnuchin to set aside trade negotiations with China and focus on Bitcoin. A recent report by Forbes indicates that the Trump administration has been pushing for the development of Bitcoin and Ethereum, but the dominance in the production of these two cryptocurrencies lies in the hands of China. The report suggests that if the future belongs to digital currencies, then the Trump administration will be ceding dominance to China.

Trump: Keep an Eye on Bitcoin

John Bolton, who served as the National Security Advisor to the White House from 2018 to 2019, has recently published a memoir that has become a focal point of current U.S. political news. Titled "The Room Where It Happened: A White House Memoir," the book reveals shocking details such as Trump's request to Xi Jinping to buy more American agricultural products to help him with his re-election, and even his approval of the measures taken in Xinjiang re-education camps. It is rumored that the contents of the book are so damning that they could lead to Trump's impeachment.

Today (22), Forbes provided a more detailed report on the book's content regarding Bitcoin and the U.S.-China relationship -

Apart from disclosing Trump's foreign policy, the memoir also sheds light on Trump's thoughts on Bitcoin. This phenomenon dates back to May 2018 when the President criticized Steven Mnuchin, the Treasury Secretary, for his approach to trade negotiations with China. According to John Bolton's account, Trump allegedly told Mnuchin at the time:

"Don't be a trade negotiator, go keep an eye on Bitcoin."

Mnuchin responded:

"If you don't want me to focus on trade, then let your economic team do what you want."

Trump's statement suggests that he was well aware of China's control over Bitcoin. However, Mnuchin seemed indifferent as he never took Bitcoin seriously. Interestingly, despite China's significant share in Bitcoin and Ethereum mining, the Trump administration chose to support these cryptocurrencies. On June 14, 2018, William Hinman, the Director of Corporate Finance at the SEC, announced unexpected new policies for these two cryptocurrencies at the "Yahoo Finance All Markets Summit: Crypto."

At the conference, William Hinman stated that applying the disclosure regime of federal securities laws to Bitcoin or Ether seemed to make no sense, further adding that while they may have started as securities, they eventually evolved into decentralized networks owned by no one. John Bolton described this moment in his memoir:

"Like a priest giving absolution, Hinman granted forgiveness and blessing to these two cryptocurrencies. The person next to me showed me his Coinbase account, and the prices of Bitcoin and Ethereum were skyrocketing at that time."

However, apart from these two cryptocurrencies, the U.S. government has not made similar statements regarding other major native coins such as Cardano, EOS, Litecoin, and the like.

U.S. Support, China's Control

After the U.S. government's stance, the computing power for Bitcoin and Ethereum within China nearly doubled. According to a research report published by CoinShares in December 2019, the research team discovered a significant increase in computing power in China. CoinShares stated:

"Up to 65% of Bitcoin's computing power is located within China, the highest level since the beginning of network monitoring at the end of 2017."

Although the Chinese government appeared to be cracking down on blockchain and cryptocurrencies, they quietly allowed Chinese miners to mine Bitcoin and Ethereum at extremely low electricity costs. Most of this activity comes from Sichuan Province, where there are inexpensive hydroelectric power facilities. According to CoinShares, Sichuan alone accounts for 54% of the global Bitcoin computing power, with the remaining 11% coming from Yunnan, Xinjiang, and Inner Mongolia in China. While there was no in-depth study at the time on the exact location of Ethereum computing power, based on the distribution of mining pools, Ethereum is also dominated by Chinese miners.

This situation may be seen as a choice to maximize miners' profits. The U.S. government's approval of these two cryptocurrencies implies that mining these coins can be more profitable. However, the Chinese government, which has always been skeptical of cryptocurrencies, tacitly allowed this behavior, leading to suspicions that they aim to control the upstream production of these two cryptocurrencies. Author of "China's Great Wall of Debt," Dinny McMahon, wrote in his book:

"China certainly hopes to replace the dollar as the world's reserve currency. Controlling Bitcoin is crucial, as it would give China more leverage in the global capital markets."

Bloomberg's report suggests that the Trump administration's refusal to provide a clear regulatory framework for other cryptocurrencies has fueled the development of Bitcoin and Ethereum. However, currently, China holds a certain level of dominance in the production of these two cryptocurrencies. The report speculates that if the future belongs to digital currencies, the Trump administration will cede control to China.