China is cracking down on bitcoin even more now and it’s getting worse, but is it somehow getting better? Mining bitcoin could get easier, after China’s crypto crackdown as stated in this article:
“China’s crackdown intensified over the weekend, with authorities in the hydropower-rich Chinese province of Sichuan ordering crypto miners to shut down operations.
According to reports, more than 90% of China’s bitcoin mining capacity is estimated to be closed. It is thought that between 65% to 75% of all global mining takes place in China.”
This is big news, but we have to ask ourselves why China is cracking down on bitcoin?
Well they’re citing environmental concerns since bitcoin is supposedly bad for the environment. So it could be that China is taking a very powerful step towards environmental health, though it seems to come out of character as China is literally the embodiment of environmental degradation.
Perhaps it’s not about the environment folks, but the fact that they’re trying to release their own digital currency. The digital Yuan is China’s own version of a cryptocurrency that stands to give Beijing power to track spending in real time. Additionally it’s a money that isn’t linked to the dollar-dominated global financial system.
Whether if it’s truly based on environmental concerns or they just want to clear out all competition for their emerging digital currency, China is going for the jugular on bitcoin mining. So while this might not be good news for miners in China, this could definitely be beneficial for the larger bitcoin mining community.
The more and more miners that pull out of China and the more mining operations that are shut down in China, the more and more easy it is to mine bitcoin. Bitcoin’s hash rates have gone down from a record 180.7 million terrahashes per second in mid-May to around 116.2 million.
Crypto experts are saying that with more miners going offline due to China’s restrictions, other miners share in the network will increase potentially making mining more lucrative.
Essentially network difficulty decrease the less mining equipment is online. So there is definitely opportunity here even tough bitcoin has dropped in half since April, and it was below $30,000 earlier this week.
At the same time this new story seems to be communicating something much bigger. Let’s say that bitcoin bounces back from this attack in China and it results in bitcoin’s growth in the short and long-term. If this situation ends up being a good thing for bitcoin, think about the implications of that. That means that even when a mega, super power like China decides to eliminate bitcoin from its country, bitcoin inevitably gets stronger.
Out of all the countries that would be able to affect bitcoin, China is definitely one of them. It’s very ironic also since as the crackdown intensifies we’ve seen that this is incentivizing people to invest their mining operations elsewhere. Thus more money and resources are going to enter this market and it speaks to the anti-fragility of a network like bitcoin.
Anti-fragility is a really important concept that communicates what some people see as the biggest value in a network like bitcoin. The term itself has been made popular by an author called Nassim Taleb who defines anti-fragility in an interesting way.
“Anti-fragility is when systems companies or individuals are getting stronger as they face chaos, they are attacked, as they face stress and disorder.”
Some things benefit from shocks, they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. So an anti-fragile system gobbles up an attack, it loves when there’s chaos, it loves when it’s rug is pulled out from under it, it gets stronger because of these events.
It would be beneficial if the cryptocurrency marketplace starts to recognize the anti-fragility of bitcoin, more and more as it’s happening in real time and not just in theory. When this anti-fragility starts to be noticed as well in other systems and networks like ethereum, we would probably see more and more confidence in the market and we would probably see more interest and investment.
As people become more and more aware of the potential anti-fragile nature of the cryptocurrency marketplace they’re going to be more confident and comfortable in investing. So although China is attacking bitcoin it should conjure up optimism in what we’re learning about the cryptocurrency marketplace from this attack. This is all dependent of course on if bitcoin is able to bounce back and show its anti-fragile nature.
With all this being said, some people are still scarred from the huge crashes in cryptocurrency and bitcoin we’ve experienced. Investors are feeling hesitant to jump back in, especially when a currency like bitcoin has dropped 50%. With such a huge market cap, there was a lot of money lost from that market.
So let’s say you want to jump back in and are realizing the anti-fragile nature of this marketplace. You’re wanting to invest back into cryptocurrency, but you don’t want to play this game hoping that a coin or a project doesn’t collapse by 50% in one day. This is the perennial problem in investing in stocks, this is the challenge of volatile assets, this is the risk of cryptocurrency, but these risks can be mitigated.
There’s a project called Ydragon, which has put together an index fund of cryptocurrencies. This has been done before in the cryptocurrency universe with another project called Crypto20 that created a tokenized cryptocurrency index fund. On the mainstream stock market Bloomberg also created the Galaxy Crypto Index.
However Ydragon is a little bit different from these aforementioned funds, as it offers a unique value point that should be discussed. So what is an index just for clarification, an index is a collection of high performing assets like the S&P 500 (which is the 500 largest companies on the stock market).
A cryptocurrency index in theory, would be a basket of some of the best performing cryptocurrencies. Ydragon’s token system though is unique in that the holders of the Ydragon index (the collection of top-performing cryptocurrencies) can also generate high yield and passive income on collateralized assets through their staking platform. So not only are you able to invest in this index, but you’re also able to stake the Ydragon token and gain passive income on their platform.
They are cross-chain, which allows you to invest in indexes from various blockchains, they have yield generation built in, there’s risk diversification (because if one coin collapses there are other coins in your index that are holding up the value protecting you from volatility), and their token also has governance and utility functions.
Ydragon will be launching on the Binance Smart Chain (BSC) with the B5 Index, which is composed of the top 5 performing tokens in the BSC ecosystem. Their technology will allow them in the future to expand it to other blockchains.
Transcribed from
Transcribed by Jacob Isenberg
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