China is once again the villain of the crypto ecosystem, although now it seems to have carried out an attack that it had not done before. With prohibitive measures for miners that were deployed in different provinces of the country, the Chinese authorities have generated one of the last blows within the crypto market. Will Latin America have a chance in the midst of this chaos?
May 2021 will go down in the history of Bitcoin as one of the worst performing months in the history of the asset. In the midst of a wave of FUD (Fear, Doubt and Uncertainty) caused by China, the United States, Elon Musk and Tether, The price of Bitcoin began a decline that has taken it up to 50% below its all-time high reaching in April.
Precisely one of the generators of the downward pressure in the market was China. The greatest threat began on May 21, with the words of Liu He, a member of the Political Bureau of the Central Committee of the Chinese Communist Party, where stated that it would “crack down on Bitcoin mining” and claimed that they were taking these policies to, among other things, “resolutely prevent and control financial risks” in the Chinese economy.
China crushes exchanges
Since then, the effects have been felt both in China and on the Bitcoin network. Despite the secrecy surrounding the mining industry in the Asian giant, It became known how the application of measures did not wait in regions such as Xīnjiāng, Inner Mongolia and Sichuan, the last of which has become public and has been widely discussed on social networks.
From Sichuan, you could see that video that went viral through social networks where hundreds of equipment from a farm that is presumed working in that region appear turning off.
Just as the photos of the completely empty Sichuan farms also became viral, revealing large infrastructures where thousands of ASIC equipment for Bitcoin mining could be housed, although the veracity of this last photograph has since been questioned.
However, beyond what is commented on social networks and the little audiovisual material that comes directly from China, the Bitcoin network has also felt the blow from the disconnection of Asian miners.
Data from mempool.space confirms that the next difficulty setting will have a drop of 18.55% when readjusted for the end of June. Taking into consideration that in the last two difficulty settings readjustments of -5.30% and -15.97% have been made, it can be concluded that a large amount of hashing power has been disconnected from the Bitcoin network.
Although determining the hash power with exact numbers within the Bitcoin network can be an impossible job to determine given the large number of actors converging at the same time within the network, the downturn is clearly noticeable.
Industry figures like Adam Back have even come out to clarify the numbers a bit to highlight that the more or less exact percentage of the network’s hash power drop in recent days has been 39%, this starting from the highest point of 160 EH / s until reaching 98 EH / s, which would be the minimum seen in recent days.
A unique opportunity for Latin America to absorb the Bitcoin mining industry?
Faced with the new bans and blockades imposed by the Chinese Communist Party on Bitcoin, the frenzied movements and transfers of miners have not been long in coming. From the networks themselves, they have emerged from institutional messages from large companies announcing their transfers to neighboring Asian countries of China to images of shipments of tons of mining equipment to the United States.
However, in the midst of this “forced exile” that has been seen, One of the regions that awaits attentive to the situation is precisely Latin America, where countries such as Venezuela, Paraguay, Argentina and more recently, El Salvador with its popular “Bitcoin Law” could be presented as the next mining paradises.
El Salvador Bitcoin
To learn more about all this, BeInCrypto spoke with Theodoro Toukoumidis, CEO of Doctor Miner, the only Bitcoin mining pool based in Latin America, who responded that given the possibility that the exodus from China ends in the region, expressed that In the days to come, the miners will surely find themselves with “problems” in assuming that scenario, predicting that they do not believe that this immigration will happen in a month or two months, but probably in a period of six months to a year.
Toukoumidis explained that the problem was not due to the construction of infrastructure, emphasizing that the disadvantages were in the generation and distribution of electric power, detailing that the region is not suitable to support all the transfer of Chinese miners.
Although, on this point in particular, Juan José Pinto, CBO of Doctor Miner, expressed that he does not consider viable the solution of building infrastructure for the generation of electricity for mining in the region. In Pinto’s opinion In the region there is still installed electricity production capacity that is “idle” and that could be used for cryptocurrency mining.
Continuing on the vision of the exodus of Chinese miners in the region, he expressed that Toukoumidis, although in the region it could be understood that there is not the capacity to withstand the entire exodus, he mentioned that countries such as Venezuela, Paraguay or Argentina have the possibility of receiving some of that hashing power from miners. Above all, he mentioned that The region could serve for the miners to “avoid risks” and decentralize the industry by not placing all the equipment in a single region such as the United States, which is the jurisdiction that has been taking the most force among the miners’ ideology.
Cryptocurrencies in Latin America
In addition, Pinto also shared some words to add as an experiential case his experience precisely with Chinese miners immersed in the middle of the exodus that They have expressly commented that they are seeking to reach Paraguay to install their equipment.
On the other hand, regarding the specific problems that still stand out in the region, Toukoumidis highlights that Paraguay and Argentina have bureaucratic problems for the transport and import of equipment, while Venezuela have a legal-political problem that does not generate confidence for the foreign investor.
Venezuela electricity limit
Regarding other countries in the region such as El Salvador, Toukoumidis mentioned that despite the enthusiasm that can be observed and the legal facilities that are being presented through government initiatives, These locations do not have sufficient electricity generation to sustain a large percentage of the exodus of miners, so additional investments would have to be made to adapt.
The post Is Latin America an alternative for BTC miners after the disconnection in China? was first seen on BeInCrypto.