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“If the U.S. stopped all the U.S. miners, Kazakstan stopped all the miners there — that kind of shuts down 80 percent to 90 percent of the hash rate pretty quickly,” Curtis Spencer said.
Curtis Spencer, co-founder and investor at Electric Capital, said that the Bitcoin network may owe its continued survival to the good graces of world governments.
In a panel at the Collision web summit on Tuesday, Spencer said lawmakers are the ones giving Bitcoin (BTC) a chance to grow by not imposing harsher restrictions on mining operations in their respective countries. The Electric Capital executive was speaking alongside Michael Jordan of Galaxy Digital, Kartik Talwar of A Capital, Ash Egan of Accomplice, Tara Tan of IDEO CoLab Ventures, and moderator Min Teo of Consensys about the state of cryptocurrency investment in 2021.
“Could the government really put a stop to Bitcoin?” Spencer wondered. “I actually believe it could be. When you consider the cost of attacking the network, it is not something that nation-states are incapable of doing.”
“Look at what happened in Xinjiang. You could shut down the Bitcoin mining network actually pretty quickly, especially if the U.S. stopped all the U.S. miners, Kazakstan stopped all the miners there — that kind of shuts down 80% to 90% of the hash rate pretty quickly. I think the fact that [Bitcoin is] still here means governments are supportive.”
Spencer was responding to recent events in China’s Xinjiang region, which accounts for roughly 25% of Bitcoin’s global hash rate. Willy Woo, a cryptocurrency market analyst, reported that BTC’s weekend decline to $50,000 was caused by a power outage in the city, which reduced the hash rate from 172 terahashes per second to 154 million TH/s.
The power outages were allegedly introduced to encourage safety checks in the region, meaning that there appears to be nothing preventing the Chinese government from deliberately lowering the hash rate. While fellow panellist Jordan claimed that policymakers were beginning to change their views on cryptocurrency, he seemed to be responding to officials not attempting to close down the internet network rather than targeting miners.
“You hear regulators speaking with a newly sophisticated term, which is that ‘You can’t ban Bitcoin,’” said Jordan. “You can basically cut yourself out of innovation and participation and economic growth that these systems precipitate for other citizens, but you can’t actually ban it.”
At the moment, the regulatory climate in the United States seems to be favouring crypto miners rather than shutting them down — while some farms in Texas did have to restrict activities during this year’s big winter storm. In an attempt to lure new businesses, Kentucky legislators recently passed two measures that would include tax cuts to cryptocurrency miners.