China’s Power Outage Proves Bitcoin Is Centralized. Or Not.
Why the most popular conclusion is also the wrong one
I knew something major happened last Sunday as soon as I wandered past my office and noticed a few anomalies on the computer screens, even from a distance.
Not only had the Bitcoin fees and mempool charts gone through the roof, the price and hash rate charts had gone through the floor. All at the same time.
Now, if I’m honest, as an analyst I love this sort of stuff. Charts, graphs and numbers that measure different things independently and tell a story are kind of, well, sexy.
In this case, it was pretty easy to work out was going on. The issue was quickly identified as a power outage in the Xinjiang region of China, and some mining operations had been forced to go offline as a result.
The story, however, was a little more complex, as it soon became clear that the incident raised questions about Bitcoin’s environmental impact (again, yawn) and just how much mining takes place in China.
In turn, both of these elements created even more commentary due to the perceived implications, and the whole lot combined to spark a massive sell-off in the markets that liquidated anywhere up to $9.38 billion dollars (if you include altcoins)…
