It has often been discussed in the past how China controls a majority of Bitcoin’s (BTC) hash rate, with figures from May indicating that 65% of Bitcoin’s hash rate was in China. It seems China’s stranglehold over the Bitcoin mining industry is only increasing, and now 71.7% of the Bitcoin hash rate is located in China according to the University of Cambridge. Equivalently, this means that all of the other countries in the world combined have only 28.3% of the Bitcoin hash rate.
China’s control over the Bitcoin network is even more extreme when analyzing mining pool dominance. Poolin, F2Pool, BTC.com, AntPool, HuobiPool, ViaBTC, 58COIN&1THASH, and BTC.TOP are mining pools located in China, and they collectively control 81% of the Bitcoin hash rate.
This figure doesn’t even account for other pools which are located in China, so in reality the number may be closer to 90%.
Essentially, not only is 71.7% of the hash rate located in China, but miners in the rest of the world are generally pointing their hash rate at Chinese pools, since Chinese pools are the biggest and find blocks the fastest, increasing the amount of hash rate that is controlled by China even further.
Zooming out, this seems to be a fundamental centralization problem for Bitcoin. Anyone mining in China, and Chinese mining pools, are subject to Chinese laws, and if the government decides to fork Bitcoin in order to centralize it or destroy it, it doesn’t seem like there’d be any good way to stop it. Chinese miners and pools would either have to comply or go to prison.
Although this scenario seems unimaginable, it is becoming more likely as global fiat currencies, including the Chinese Yuan (CNY), weaken amid the Coronavirus induced economic depression.
Basically, if the Chinese Central Bank decides that Bitcoin needs to be eliminated in order to bolster the CNY, it seems China has the power to do so, because the Bitcoin network is controlled by mining rigs and pools which are physically located in China.
The only solution to this issue would be to launch mining pools in other countries in order to decentralize the hash rate, but this seems to be a losing game, since China has the cheapest electricity and the cheapest mining rigs in the world.
Ultimately, the only hope is that China will never try to commandeer the Bitcoin network, and will instead focus on mining massive amounts of Bitcoin instead in order to enrich the country.