The China-US Crypto Cold War sees the two biggest economies compete for blockchain supremacy as well as artificial intelligence. So let’s see how big of an impact this can have on the market in our crypto news today.
China has been looking to increase its capabilities in the blockchain space especially now since most of the BTC miners are concentrated in China. The rollout of China’s digital yuan project is seen as a long-term threat to the US dollar. The China-US Crypto cold war is only deepening because both countries are battling in every field from trade to finance, blockchain, and Artificial intelligence. Both countries also clashed diplomatically over China’s handling of the neighbors like Taiwan.
China sees the island nation as a breakaway province that should be brought back into the country’s sphere of influence while America sees Taiwan as an independent state and helped the island arm itself against China and other foreign aggressions. These opinions have been extended now to the Spratly Islands which is a group of uninhabited islands in the South China Sea. As a result of the oil being discovered below the sea, China was actively expanding international boundaries by putting military bases on the islands which led to a series of skirmishes with other countries that are laying claim to the South China Sea. The US condemned the action already.
In technology, there’s a strong rivalry between the two countries when it comes to 5G as the rollout of Huawei’s network had some claiming that China will be spying on its rivals even more. China’s expanding AI capabilities, facial recognition technologies and more, are bringing the Asian giant into huge competition with America. Another aspect of the China-US Crypto cold war is that both countries are trying to dominate the blockchain industry.
American businesses established themselves as the main pillars of the crypto community which cannot be said about the US government. While America pursued a cautious approach to the world of BTC and Blockchain, China raced ahead. In 2020, China controlled about 80% of the global processing power which runs the Bitcoin network which means the majority of the world’s transactions are routed through machines in the country and this is all because of the cheap electricity.
BTC miners in China are building in high concentrations near coal or hydroelectric power plans in Inner Mongolia or the Yunnan province. This allows them to keep operating the costs to a minimum while they churn away huge amounts of power and mining rewards. The disadvantage here is however, the Chinese stated exerts influence over the network in such high concentration that other states cannot. Emin Gun Sirer who is a computer scientist and CEO of Ava Labs commented:
“This is an enormous issue. These miners could receive injunctions that compel them to act in a certain way. The Chinese government would say the money at certain addresses must not move and it compels the Chinese miners to not include certain transactions so they can selectively censor certain users of a blockchain.”