Chinese media strongly advocates for a resolute ban on cryptocurrencies, protecting investors from the risk of a LUNA collapse, while China's computing power quietly returns to second place globally.

In May last year, China announced a ban on cryptocurrency trading, followed by further crackdown on mining activities in June. By October last year, Bitcoin's hash rate had almost plummeted to zero. Regarding the recent collapse of LUNA, Chinese media have called for decisive and effective regulatory actions domestically to efficiently shield investors from risks in the cryptocurrency market. However, according to the Cambridge Centre for Alternative Finance, China's hash rate has rebounded to about 20%, ranking as the world's second-largest.

China's Regulation

In May of last year, China announced the "ban on financial and payment institutions handling cryptocurrency transactions," followed by further crackdowns on mining activities in June. This led to domestic miners leaving the country and foreign miners withdrawing, resulting in Xinjiang being removed from its status as the world's largest Bitcoin mining region.

Bryan Bullett, CEO of New York-listed Bitcoin mining company Bit Digital, described China's regulatory crackdown on mining as a "historic fault line in hash rate."

However, with mining companies relocating to other countries, Bitcoin's hash rate returned to pre-ban levels in China on December 21st of last year and continued to rise to a historic high.

Economic Daily: Decisive and Effective Regulation

In response to the recent collapse of LUNA, the Economic Daily titled an article "Speculation on virtual currencies will eventually come to nothing," pointing out that LUNA plummeted by more than 99%, almost to zero, with BTC and ETH also experiencing consecutive plunges, once again proving the high risks inherent in cryptocurrencies through practical actions.

It also praised China's effective and firm firewall that has effectively isolated cryptocurrency pyramid schemes domestically. The series of bans last year comprehensively extinguished the speculative "bubble" of virtual currencies, efficiently protecting investors' funds, once again demonstrating the decisive and effective nature of China's regulatory actions.

However, China's Bitcoin hash rate quietly returned to the world's second-highest level.

Return to Mining Powerhouse

According to the Cambridge Centre for Alternative Finance (CCAF)'s global Bitcoin hash rate distribution map, China has once again become a mining powerhouse, with the hash rate distribution among various countries as of January 2022 as follows:

• 37.8%: United States (in red)
• 21.1%: China (in yellow)
• 13.2%: Kazakhstan
• 6.48%: Canada
• 4.66%: Russia

It is important to note that the percentage figures can distinguish the increase or decrease in hash rate among countries. A decline in the hash rate of a single country does not necessarily mean a reduction in mining activities domestically, but may be due to the growth rate of hash power not exceeding that of other countries.

As for the current largest hash rate country, the United States, hash power is primarily concentrated in three major states, accounting for over half of the U.S. hash rate:

• 30.7%: Georgia
• 11.2%: Texas
• 10.9%: Kentucky
• 9.77%: New York
• 7.9%: California
• 4.7%: North Carolina
• 4.1%: Washington

The CCAF indicated that the rebound of China's hash rate indicates the formation of underground mining activities in the country, confirming the assumption by industry insiders that Chinese miners primarily evade regulations through geographically dispersed and concealed small-scale mining activities.

In addition, a study by the internationally renowned scientific journal "Joule" also pointed out that China's carbon footprint from mining has increased rather than decreased since the mining ban. The study concluded that compared to most mining powerhouses, Chinese miners are more focused on renewable energy.

One of the authors, Alex de Vries, stated:

The emphasis of this study is on Bitcoin's energy consumption, which has become dirtier after the ban in China. Many mining activities that were previously based on hydroelectric power have been replaced by gas-fired power, resulting in a higher carbon footprint from PoW mining compared to before.

The study also contradicts the Bitcoin Mining Council led by Michael Saylor, whose quarterly reports claim that Bitcoin mining uses up to 66% renewable energy.