Resistance is Futile! Three Reasons Why Bitcoin Mining Will Always Persist
Many governments have attempted to prohibit Bitcoin mining, yet information and perspectives from individuals in the mining sector indicate that accomplishing this is more challenging than mere words suggest.
David Becker 
China's Bitcoin Mining Ban: Lessons Learned
In the summer of 2021, the Chinese government imposed a ban on Bitcoin mining, citing concerns about adverse environmental impacts and money laundering. However, the Chinese government is now working on launching its own digital currency, the digital yuan, which raises questions about whether the initial reasoning behind the ban was a mere facade.
Testing Bitcoin's Resilience
At first glance, this ban could have had a significant negative impact on Bitcoin's momentum. China had been a major hub for Bitcoin mining, with nearly 75% of all mining activity taking place in the country by late 2019, according to Cambridge Alternative Finance Benchmarks. If the Bitcoin network had faltered under the weight of China's nationwide ban, other governments might have been emboldened to believe that Bitcoin could be defeated.
Share of global Bitcoin hashrate. Source: University of Cambridge, Reuters
Bitcoin's Resilience Shines
Initially, the ban did have the intended effect. By the end of June 2021, the Bitcoin network's hash rate had dropped significantly, reaching 57.47 exahashes per second (EH/s). However, the hash rate rebounded to 193.64 EH/s by December 2021, and by February 2022, it reached an all-time high of 248.11 EH/s.
The ban turned out to be a stress test for Bitcoin, and it demonstrated the resilience of the network. Banning Bitcoin mining proved as ineffective as the Prohibition era was at eliminating drinking culture in the United States.
The Great Migration and Beyond
In early 2022, the most apparent explanation for the hash rate's recovery was that miners who had been operating in China had relocated to the Western Hemisphere. This hypothesis was supported by evidence, including a significant increase in the United States' share of the global hash rate, rising from 4.1% in late 2019 to 35.4% in August 2021.
However, the unintended consequences of China's ban may have extended beyond this "great migration." As of May 2022, Chinese miners still accounted for 22% of the global hash rate. It's plausible that a substantial black market for Bitcoin mining has emerged in China, with miners adapting to the new circumstances and continuing to operate covertly, potentially using foreign proxy services to evade attention and scrutiny.
**China's Inability to Suppress Bitcoin Mining**
Despite the authoritarian nature of the Chinese government, its citizens have found ways to engage in Bitcoin mining, highlighting the importance of this activity to them, even if it means breaking the law. The potential benefits of mining Bitcoin seem to outweigh the risks associated with getting caught.
The United States and the Bitcoin Mining Boom
While China's ban led to a migration of miners to other countries, particularly the United States, it also had a positive impact on the U.S. economy. Data centers for cryptocurrency mining in the U.S. saw a surge in demand as mining operations sought to move their equipment from China to the United States. This migration of mining operations could lead to a self-reinforcing cycle, benefitting the United States and potentially bolstering the broader blockchain economy.
Lessons for Western Politicians
The lessons to be drawn from this black market phenomenon are essential for Western politicians. If the Chinese government, despite its authoritarian measures, couldn't eliminate Bitcoin mining, other governments are unlikely to succeed. As the United States and other world leaders navigate the regulatory landscape of the cryptocurrency industry, they should be attentive to the fact that banning Bitcoin mining is an impractical and futile endeavor. Bitcoin mining is here to stay, and efforts to suppress it are likely to be in vain.
The United States and other global leaders should take this lesson to heart and avoid repeating the mistakes of the past, learning from China's experience in dealing with Bitcoin mining.
