Researchers argue that China is the “most powerful opponent of Bitcoin”

china bitcoin

A study conducted by Princeton University and the US International University of Florida concludes that three-quarters of Bitcoin mining is based in China. The study warns about the potential risks that could result from the significant geographic centralization of the mining network.

Entitled “The Looming Threat of China: An Analysis of Chinese Influence on Bitcoin,” the study seeks to explore “how China threatens the security, stability, and viability of Bitcoin through its dominant position in the Bitcoin ecosystem, political and economic control over domestic activity, and control over its domestic Internet infrastructure”.

The study begins by describing China as “one of the most powerful potential adversaries” for Bitcoin, adding that the country has expressed contradictory positions on cryptocurrencies and has demonstrated powerful capabilities to influence it.

Researchers estimate that “74% of the hash power on the Bitcoin network is in Chinese-managed mining pools” and seek to explore ways in which this centralization of mining energy can be leveraged by the Chinese government to attack the Bitcoin network.

The document states that China-managed mining pools have constituted more than half of the total hash of the network since 2015, adding that in June 2018, more than 80% of Bitcoin’s mining was carried out by six mining pools, with five of these six pools being managed by individuals or organizations located in China.

The power of Chinese Mining Pools

Although “mining pools can not be directly controlled by China,” the study emphasizes that its operators “are subject to Chinese authorities” because they are located in China. As such, the report argues that because managers are responsible for assigning mining jobs and propagating complete blocks, they control the inputs and outputs of their miners, allowing Chinese authorities to indirectly control that hash power.

Additionally, The paper argues that the strong centralization of mining activities in China could pose a 51% threat of attack, stating that the Chinese government exercises strong centralized control over economic and financial activity and also operates extensive surveillance and censorship regimes on the Internet domestic.

Although capabilities do not give them direct command of all hash power in Chinese-managed pools, the document states that the Chinese government has “a variety of tools at its disposal to influence these pools and Bitcoin in general. They have implemented several rounds of restrictive regulations that have brought down Bitcoin’s global market. ”

The report concludes that China has mature capabilities and strong motives for conducting attacks against the BTC. The researches argue that the ideological opposition to the centralization of the Chinese could provide the motivation for an attack against the network. Also, the growing integration of Bitcoin in the global economy and the resulting possibility of exerting influence in a foreign country where Bitcoin is in use could be a motive.

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