Bitcoin Enters Geopolitics – Bitcoin Magazine: Bitcoin News, Articles, Charts, and Guides

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Dilution-proof, July 1, 2021

Cycling On-Chain is a monthly series that uses on-chain and price-related data to better understand recent market movements and estimate where we are in bitcoin’s larger market cycle. After providing a broader look back and forward in the previous edition, we’ll now look at Bitcoin’s on-chain data through the lens of June’s two most impactful events that introduced Bitcoin to the geopolitical stage: China cracking down against Bitcoin while El Salvador accepts it as legal tender.

China Crackdowns

Since mid-April, China has played a large role in Bitcoin-related news. Following some coal mine accidents in Xinjiang, the Chinese government instituted a power blackout for a ‘comprehensive power outage safety inspection’ on April 15, 2021. Because that area was accounting for a relatively large part of Bitcoin’s overall hash rate (the computational power of miners that is used to create new blocks and secure the network), the blackouts severely slowed down the Bitcoin network for one or two weeks.

A month later on May 18, when Bitcoin’s hash rate had largely recovered, China banned its financial institutions from offering Bitcoin services. This drove further fear into a market that was already anxious after Elon Musk tweeted the prior week that Tesla would stop accepting bitcoin for payments out of environmental concerns.



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