China, this silent bitcoin whale

La Chine, cette baleine silencieuse du Bitcoin

The Chinese state now has less than 194,000 BTC. That’s more than MicroStrategy and Tesla combined. Enough to allow the Middle Kingdom to put Bitcoin down in a matter of seconds, if it decides to…

After ten years of suppression, the state of China would have seized a total of 194,000 bitcoins

China doesn’t like Bitcoin but the Chinese do. China’s enthusiasm for BTC mining contrasts with the position of the central state, which has made life difficult for cryptos since 2013. Unsurprisingly, decentralized payments by their very nature threaten the country’s monetary policy and central bank digital currency (MNBC), the famous digital yuan.

Unfortunately, we are forced to laugh when we see the figures published on November 2 about it CryptoQuant, a blockchain data analytics platform. Because these data are cooling: so the Chinese authorities would have an estimated deposit of 6 billion dollars in cryptocurrencies today. More than 194,000 BTC, most of these holdings are 833,000 ETH. Most of the signs come especially from disassembly MoreToken in 2019.

Be it bitcoin whaleThe Chinese authorities have thus acquired a nuisance force capable of sending BTC to the bottom in a matter of seconds, if they so choose…

China, this silent bitcoin whale

Top 5 Governments holding BTC – BuyBitcoinWorldwide (c)

For comparison, the first holder of bitcoins in the world, the American company MicroStrategy, has “only” 130,000 bitcoins:

China, this silent bitcoin whale

Top 8 companies/foundations with the most BTC – BuyBitcoinWorldwide (c)

China’s major anti-crypto measures

Let’s put the scam aside MoreToken, which is clearly a financial crime. PlusToken has indeed presented itself A cryptocurrency wallet that rewards its users with high returns if they bought their tokens in PLUS tokens, associated with the wallet with Bitcoin or Ethereum. Chinese media reports that the scam attracted more than $3 billion of cryptocurrency. Chainanalysis, a blockchain analysis company, allegedly tracked a total of 180,000 BTC, 6,400,000 ETH, 111,000 USDT and 53 OmiseGo (OmiseGo) moved from scam victims to the PlusToken wallet, which is about $2 billion.

Let’s take a look at how the Chinese government has been tightening its crypto policy for nearly a decade:

  • December 2013 : the central bank publishes a notice banning financial institutions from processing Bitcoin transactions. Its price drops 20% to $890.
  • September 2017 : the central bank publishes a notice to ban Initial Coin Offering (ICO), cryptocurrency fundraisers that finance embryonic crypto projects. The authorities are also banning all exchange platforms from Chinese soil. Bitcoin price drops 30% to $4,000.
  • April 2019 : The Commission for National Development and Reform, a body under the authority of the Prime Minister, threatens to include cryptocurrency mining in the list of prohibited activities. Bitcoin price drops 11% to $4800.
  • May 2021 : the Financial Stability Development Committee, a body responsible to the Prime Minister, announces that mining is preventing China from achieving its environmental objectives. Several regional authorities, including in Sichuan, Xinjiang and Central Mongolia, are closing facilities. The central bank also announces that financial institutions and payment companies are no longer allowed to provide crypto-related services. Bitcoin price drops 35% to $30,000.
  • September 2021 : China’s central bank and nine other government agencies jointly issue guidance to ban cryptocurrency transactions, reiterating that exchanges cannot serve Chinese users. The National Development and Reform Commission also recommends that mining be placed in the category of industries to be phased out. Bitcoin price drops 11% to $40,000.
silver china

To protect its digital yuan, the Chinese state banned the use of cryptos on its soil

Quietly, China is once again the world’s second largest miner

Despite the ban on mining on its soil in 2021, the equipment of Chinese miners only abandoned the country for a while. Exiled for a few months to the more accommodating neighboring countries – Kazakhstan, Singapore, Thailand – the miners have indeed returned to occupying the land.

Before the official ban and threats against crypto miners, China concentrated up to 50% of Bitcoin mining. A hegemonic position he abandoned in favor of the United States.

Using data provided by the Cambridge Bitcoin Electricity Consumption Index (CBECI), we know that the China is back to just over 39% of global hash power of Bitcoin. In the diagram below, we see after it has almost disappeared between June and July 2021 (yellow band), this share came back very surprising. Maybe a little too surprised?

China, this silent bitcoin whale

Chinese miners account for 39.9% of the worldwide hashrate – CBECI (c)

Between hypocrisy and pseudo-laxity, the Chinese still have access to cryptos

Beijing always seems to master the art of ambiguity as well. Sometimes he blows the cold, trying to get to the end of his regulatory ambition against decentralization. Sometimes the hot, let him go and temporarily muting his most anti-crypto senior officer.

Despite the ban on crypto exchanges in 2017, many platforms continued to allow Chinese people to exchange their yuan for cryptocurrencies and NFTs. The Chinese can identify themselves on these sites without using a VPN (software that makes it possible to modify their geographic address, nldr). Although there is a risk of sanctions, these platforms do not seem to be worried.

This is for example the case of Huobi platform. The tenth largest crypto exchange, with $500 million in daily volume, appears to accept Chinese residents. He announced at the end of 2021, however, that he was preparing to close the local accounts. She has since moved to the Seychelles… Continue the OKX programusers can still use mainland Chinese phone numbers to register, for example using an IP address located in Hong Kong.

Regarding the Binance platform, the market leader with a daily volume of more than 10 billion, many Chinese traders report on the forums that its platform is still accessible to customers who register with a Chinese passport. Even better, we see that OTC transactions with Chinese crypto holders are still working normally.

Binance and its CEO CZ are fighting back against the legal onslaught

In June 2021, the Chinese state blocked the launch of the Binance platform with its “Great Firewall”

Should we fear China? The answer is yes. The main risk comes from a a so-called “double spend” attack. This allows an attacker who has taken control of most of the mining power to block or even cancel Bitcoin transactions. By taking control of the mining farms on the soil, China would have one more weapon in the context of its trade war against the United States. And for various other purposes…

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