The price of Bitcoin fell by about 18% over the weekend and one of the factors behind this fall was a power outage in the Chinese region of Xinjiang which caused a 45% drop in the hash rate. .
The Bitcoin hash rate measures the total combined computing power used to exploit and process the cryptocurrency.
Another factor behind the immersion in Bitcoin prices was speculation that the U.S. Treasury would charge various financial institutions for money laundering using cryptocurrencies.
Ran Neuner, co-founder of Crypto Banter, host of CNBC’s Crypto Trader and CEO of OnChain Capital, called the power outage “a bit scary,” as it highlighted a significant risk for Bitcoin investors.
Speaking to Kitco’s chief editor Michelle Makori, Neuner said “what happened this weekend was a bit scary because there was a power outage in a province of China. We didn’t know the power outage, but we saw that the Bitcoin hash rate fell by 45%. “
Investors were worried about whether Bitcoin is really as decentralized as can be initially believed, Neuner added.
“What this means is that 45% of miners have equipment, mining and creating Bitcoin or confirming transactions, 45% of them fell. Since 2017 we haven’t seen a drop like that,” he said. make some alarms go off.Why? Because if something is really decentralized, if 45% of the network is in a province of China and we know that China has had conflicting opinions about Bitcoin … what happened it was that people started selling their Bitcoin because they started looking at Bitcoin and tell yourself, maybe this decentralized currency is not so decentralized after all. ”
This fear contributed to what Neuner described as “the biggest liquidation of 2008 [Bitcoin’s] history “.
The highlight of this event is that now, as more Bitcoin investors are aware of the risks, there may be an effort to further decentralize Bitcoin mining away from China.
“We are glad that this concern has finally come out and we know it, and now there is a challenge to do more mining outside of China,” he said.
The power cut in Xinjiang coincided with a change of attitude toward Bitcoin by the Chinese government, as Beijing called Bitcoin an “investment alternative” on Sunday, after years of government crackdown on cryptocurrency.
“In fact, it’s a big change,” Neuner said. “Make them take a rough turn and start saying that Bitcoin is an alternative investment and that other cryptocurrencies can also be considered, this is a huge turn and that could bring China back into the market or specifically into the speculation market, which it’s super fantastic exciting for the industry. ”
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