|BTC miners' revenue|
Bitcoin continued its dramatic plunge to $32,281 Monday morning, down 17.65% from a week earlier as some of China’s largest bitcoin mining farms were shut down over the weekend. The bitcoin mining facilities of Sichuan Province received an order on Friday to stop doing business by Sunday, according to Chinese state media outlet the Global Times.
The Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau issued an order to all electricity companies in the region on Friday to stop supplying electricity to any known crypto mining organizations, including 26 firms that had already been publicly identified,
|BTC Hash Rate|
Clearly, the decline of miners' revenue, and thus the hash rate, and thus the difficulty of mining blocks, has a long way to go before it significantly decreases the security of the Bitcoin blockchain. But this could be the start of a self-reinforcing cycle leading in that direction as the current uncertainty and the decline in the "price" as the dump follows the pump cause HODL-ers to HODL.
|Avg Transaction Fee|
Miners desperate to recoup some of their investment in hardware are shipping it to destinations outside China:
Videos on social media sites purported to show miners in Sichuan turning off their mining machines and packing up their businesses.The more of the hash rate that is located in Western countries, using power that is much more expensive than under-the-counter hydro-power in China, the worse the economics of mining. The more of the hash rate that is located in countries that follow FinCEN's guidance, the more effective Nicholas Weaver's suggestion:
Miners in China are now looking to sell their equipment overseas, and it appears many have already found buyers. CNBC’s Eunice Yoon tweeted early Monday that a Chinese logistics firm was shipping 6,600 lbs (3,000 kilograms) of crypto mining equipment to an unnamed buyer in Maryland for just $9.37 per kilogram.
It is time to seriously disrupt the cryptocurrency ecology. Directly attacking mining as incompatible with the Bank Secrecy Act is one potentially powerful tool.Weaver means that classifying mining as money transmission would force miners in countries that follow FinCEN to adhere to the Anti-Money Laundering/Know Your Customer (AML/KYC) rules. This would make mining in these countries effectively illegal, as being either legally risky or impossibly expensive, and thereby help to suppress ransomware.
Postscript: If you think that Bitcoin makes sense as a currency used to buy and sell you need to justify the graph below, which shows the total cost of making a single transaction, the average value transferred to the miners for each transaction, has been over $100 for a year and peaked at $300.