Despite China's Efforts To Limit BTC Development, PayPal Founder Wonders If BTC Is A 'Chinese Financial Weapon' Against U.S.

April 12, 2021 03:10 PM
Crytpo and Bitcoin Market Cap Story of Day

Crytpo and Bitcoin Market Cap Story of Day

CRYPTO MOVERS AND PRICES

Bitcoin and Altcoin Prices by TradingView

 

Bitcoin (BTC) has traded on either side of USD 60,000 throughout the weekend. Binance Coin (BNB) is outperforming in the Top 10 and was up 24% this morning.

Crypto Story of the Day

Last week, PayPal founder and tech investor Peter Thiel said he wonders “if at this point [BTC] should also be thought of in part as a Chinese financial weapon against the U.S.” and that “China’s long BTC.” Thiel’s remarks, however, don’t reflect the reality of China’s current approach to BTC and crypto. 

Thiel, who’s otherwise known as an early BTC investor, was speaking at a Richard Nixon Foundation event alongside former U.S. Secretary of State Mike Pompeo. Thiel remarked that even though he’s supportive of BTC, he wonders if the coin is a “financial weapon” against the U.S. because it “threatens fiat money but it especially threatens the [USD] and China wants to do things to weaken it.”

Thiel also said that “China’s long Bitcoin,” seemingly referring to the large mining operations in the country, and that the U.S. “should be asking some tougher questions about exactly how that works.” 

Thiel’s remarks reflect reports from last year that former Director of National Intelligence, John Ratcliffe, wrote to then SEC Commissioner Jay Clayton to express concerns over the concentration of crypto mining in China. Ratcliffe offered to brief Clayton on the matter. 

While China has accounted for a majority of BTC mining since the asset’s emergence, its relative share is dropping in favor of the U.S., Russia, and Kazakhstan. Recent anecdotal data points suggest non-Chinese mining businesses are driving current increases in demand for mining hardware (See 24 Hrs In Crypto, March, 2). 

Furthermore, recent headlines point to the expansion of North American BTC mining. These include Riot Blockchain’s acquisition of Whinstone US in a deal worth roughly USD 651 million, or the emergence of institutionally-focused BTC mining pool Foundry USA, launched in 2020, a top 10 contributor to hash rate. 

BTC mining has also enjoyed direct or indirect regulatory benefits and incentives in the U.S., such as a law exempting BTC miners from paying certain taxes in Kentucky, or Wyoming’s slate of crypto-friendly laws. Meanwhile, authorities in China have taken a number of steps to limit the development of BTC, including a recently announced end-of-April ban on mining in the Inner Mongolia province and forcing exchanges to shut down in 2017.

Thiel’s comments seem to be describing a hypothetical situation, rather than any current actuality, and don’t reflect China’s current approach to BTC and crypto. China has, for all intents and purposes, worked harder than any other nation to limit the development of crypto and the country has to-date been more concerned with capital flight from its own borders than USD hegemony. 

Should Thiel’s remarks become a reality, this situation would mark a significant departure from the current status quo where China has taken a range of measures to thwart the growth of BTC.

Please sign up for a free trial of FRNT Financial Morning Note.

About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets. You can subscribe to FRNT Financial Morning Note at https://www.frnt.io/morningnote