China Crypto Roundup: President Xi Praises Blockchain, Bitcoin Miners Shut Down, Price Crash Triggers Debates
In a historic week for bitcoin price that suffered an over 40% nosedive this past week along with the global financial markets amidst Coronavirus-driven panic, the crypto community has once again been on a roller coaster ride. However it was not all bad news in the Chinese crypto industry, the country’s president Xi Jinping proposes the government use blockchain to better serve social governance. Here is our pick of Chinese crypto news this week.
President Xi praises blockchain in governance
In his latest speech, China’s President Xi Jinping proposed that the government should use technology like blockchain to better perceive social situation, unblock communication channels and assist in decision-making. To build the “smart governance” model, it is necessary to realize the sharing of information and data, integrate the Internet of Things, cloud technology, blockchain and other technologies into social governance to serve social governance in the new era.
Since Xi emphasized the development of blockchain technology and called for more research, investment, and regulations for it last October, blockchain-related news from China keeps on coming as the country aims to take the lead in the race to implement blockchain initiatives.
In latest developments, the country’s capital Beijing announced its decision to launch a pilot blockchain platform for the invoicing system following a successful rollout in Shenzhen last year; the governments and medical agencies in the country have been testing new technological solutions to tackle the coronavirus crisis, with dozens of new blockchain applications launched in the past month.
Bitcoin miners shut down amid the crash
Bitcoin price’s latest plunge is creating great uncertainty about crypto miners’ profitability. According to data from mining pool Poolin, even the currently most efficient equipment on the mining market such as MircroBT’s WhatsMiner M20S and Bitmain’s Antminer S17 Pro is generating daily profits at a gross margin below 50 percent. Older yet mainstream models like Antminer S9, Innosilicon’s T2T and Avalon A9 are no longer profitable based on bitcoin’s current price.
Data shows that there have been over 38 mining machines reaching the “shutdown price”, which has reminded many of the scene last seen in November 2018 when bitcoin crashed almost 50% that month. At that time, many small and medium-sized mining farms in China had to shut down their mining machines for the earnings cannot cover electricity cost, and some even sold their machines by kilo like scrap.
If bitcoin price does not bounce back especially after the halving, many worry that history may repeat itself. For now, the bitcoin network hash rate has shown a downtrend since last week’s price plunge, falling to 99 EH/s from 119 EH/s on March 9 when bitcoin mining difficulty hit a new high.
Debates amid the red chaos
Last week’s price crash has triggered debates among the crypto community. Doubts are raised whether bitcoin is really a safe-haven asset, is bitcoin bull a disillusion amid the global financial crunch? And some crypto traders proposed the need for circuit breakers which is utilized in the stock market to halt trading when the market drops by a certain percentage in the crypto market.
While opponent argues that a circuit breaker would call into question the centralization of the crypto market while cryptocurrencies stand for decentralization and a free market that is outside the control of central entities and authorities. As leading crypto exchange Binance’s Chaopeng Zhao commented,
“Circuit breakers can only be used on a fully monopolistic exchange. Free market doesn’t work that way. btc is traded on many exchanges.”