The world’s second largest cryptocurrency after Bitcoin, Ethereum, was almost completely wiped out of existence by the latest China crackdown. The Chinese government has banned ICOs and shut down all cryptocurrency exchanges, including major platforms such as Binance and Huobi. With its mining market also under attack, Ethereum could be left without a mining hub. Could Paraguay emerge as an alternative?
China’s decision to shut down local cryptocurrency exchanges has sent the price of Bitcoin down over 40% and pulled the country’s miners off the grid. But this is just one factor that can impact the country’s Bitcoin ecosystem. There are other factors, like corruption, crime and politics that could give Paraguay a chance to step up and take the lead.
In one week, Paraguay will hold a referendum on whether the country will allow foreigners to invest in their national cryptocurrency , the petro. The proposal, which would allow foreign companies to invest in the country’s cryptocurrency industry, has sparked a fierce national debate . Supporters of the regulation argue that it will help Paraguay become an important Bitcoin mining hub in the region, while opponents say the law will bring nothing but trouble.
Bitcoin miners were dealt a blow in May when the Financial Stability and Development Committee of China’s State Council announced additional financial risk controls.The announcement is the latest in China’s longstanding friction with the crypto-currency industry. But this time, given the Chinese Communist Party’s promotion of the digital yuan, it seems that commercial operations, and miners in particular, feel stuck and look the other way.
It specifically mentions combating bitcoin mining and trading in the context of financial risk control.
Promote the reform of small and medium-sized financial institutions, emphasize credit risk reduction, strengthen financial supervision of platform companies, crack down on bitcoin miners and traders, and resolutely prevent the transfer of individual risk to the social sector.
As Latin American countries move to bitcoin, could we see a shift in the geography of bitcoin’s mining infrastructure?
Bitcoin mining hash rate drops
According to Reuters, China’s crackdown on cryptocurrencies has already reached the western province of Sichuan, where authorities have ordered the closure of bitcoin mining operations in the region.
The Sichuan Development and Reform Commission and the Sichuan Energy Bureau published a joint message on Friday, picked up by Reuters, calling for the closure of 26 cryptocurrency mining projects by Sunday.
Electricity companies in the region have reportedly been ordered to cut off the power supply to the mining companies.
The impact on the bitcoin hashrate dropped sharply at the time of the announcement. In mid-April, it reached a record high of about 180 million TH/s. But since then, the hashish rate has dropped to the November 2023 level of about 125 million TH/s, according to the latest data.
Image: Blockchain.com.
The hashrate is a measure of the processing power of the Bitcoin network. The higher the hash rate, the more secure the network. Some also use the hash rate as an indicator of the state of the network.
Will Paraguay fill the gap?
In an effort to attract miners, the United States has proposed Texas and Florida (Miami) as appropriate places to locate a workshop.
But with the influx of Latin American countries joining the bitcoin revolution, could we see Chinese mining companies preferring lower prices and abundant renewable energy in countries like Paraguay?
In recent weeks, several Latin American countries, including Paraguay, have announced their intention to follow El Salvador’s lead and officially recognize bitcoin.
In Paraguay, the Itaipú Hydroelectric Dam (IHD) is located on the Brazilian border. MGD is the second largest hydroelectric dam in the world with a capacity of 14 gigawatts. It covers 90% of Paraguay’s electricity needs and 15% of Brazil’s.
Although Paraguay’s national representative, Carlitos Rehala, is keeping his specific plans for bitcoin (and PayPal) a secret for now, it is almost certain that he will play a role in Paraguay’s bitcoin revolution, given the importance of IHD to the country.
Rehala will submit bitcoin legislation to the national Congress in July.
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The Chinese government recently announced that it would crack down on Bitcoin by prosecuting illegal cryptocurrency exchanges and blocking access to foreign websites hosting Chinese bitcoin exchanges and mining pools. This news comes shortly after last month’s announcement that China had created a national agency to oversee and oversee the future of bitcoin, and which reportedly has the power to shut down all domestic and foreign cryptocurrency exchanges.. Read more about china cryptocurrency and let us know what you think.
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