The American government’s cautious approach is costing them, as the gap between the two countries’ influence in the crypto space continues to grow
The first and second-largest economies in the world, the United States of America and China, have found themselves at the opposite ends of various issues – be it the case of Taiwan, economic trade wars, and even technological progress.
As they clash and compete to attract investors, promote innovation, and establish dominance, the past, present, and future of the blockchain and cryptocurrency space have not been left untouched. This article seeks to understand where the US-China cold war stands in the battle for crypto and blockchain supremacy by examining progress in two areas – Bitcoin mining and Central Bank Digital Currencies.
With rumoured control of over 80% of the global processing power that makes Bitcoin mining and transactions possible, there is no doubt that China has emerged as the most dominant force in the cryptocurrency mining industry.
The cheap hydroelectric power and local access to advanced mining equipment have meant that Chinese miners can minimise operating costs and gain a major advantage over their rivals in expensive energy regions. Experts have feared that such influence of Chinese miners on the crypto industry could be misused to block transactions from certain wallets, if the Chinese government compelled them to.
This has kickstarted a movement in the US to regain some influence over the mining industry with US-based companies investing heavily in the space and working towards developing advanced mining equipment at cheaper prices.
As companies like Riot Blockchain and Core Scientific have contributed to an increase in the US miners’ Bitcoin mining market share, the government has also stepped up to support the miners in its way.
States like Kentucky and Wyoming have offered tax breaks to crypto miners who operate in the energy-rich commonwealth. Kraken Financial recently became the first crypto company to receive a banking charter under Wyoming’s Special Purpose Depository Institution statute, a move that is expected to invite more crypto firms into the state.
However, despite these small wins for the US mining community, the country has a long way to go before it can threaten China’s influence over Bitcoin mining.
While the American businesses have led the fightback against China’s dominance over cryptocurrency and blockchain spaces, the US government has lost its way by adopting a cautious approach towards the technology. This stark difference between the two countries is visible in their progress so far.