Bitcoin in your wallet? China is mining it in Xinjiang.
Enodo Economics Chief Economist, Diana Choyleva, with her thought of the day.
Bitcoin is crashing after reaching record hights. Views on it vary from Larry Summers saying it’s here to stay to Keneth Rogoff, the perennial sceptic, saying that government won’t allow Bitcoin on a large scale.
I’ll say that the rationale for holding Bitcoin is very different when you think of it as digital gold, rather than digital currency. When it comes to demand, Asia and a big chunk of that is China, dominates cryptocurrency activity globally, accounting to 43%. Interestingly, among the American adults, the majority of whom are acquainted with cryptocurrencies, it’s the millennials that are the most avid buyers.
And of course, we now have institutional investor interest in Bitcoin, but it is on the supply side that China absolutely dominates, accounting for 65% of its global production. And here is where Xinjiang comes in accounting of 36% of global production. Now China’s minors have a lot to do with the current slump in Bitcoin, but I won’t discuss that here.
What I want to leave you with is the thought of what will happen to this ‘digital gold’ in the era of The Great Decupling. The US has banned imports of tomatoes and cotton from Xinjiang and Mike Pompeo’s final act against China was to declare its policies against Muslims in Xinjiang a genocide.
So will Bitcoin also become a pawn in the great superpower rivalry game?