First of all, thanks for a mostly substantive response. The crypto sector pretty much exists in a booster-only-or-your-dead space, so I hugely appreciate anyone who is willing to go over the facts and the arguments and try to be empirical, rather than the majority of the crypto-crowd, sound like cult-members.

THE MAIN PROBLEM

The PRC controls more than 2/3 of transaction validation/mining. Already PoW block chains are non-scalable and slow to the point that the overwhelming majority of transaction activity occurs off-chain in the form of Coinbase, Huobi, Binance and the stack of others. So, if you remove 2/3’s of the processing capacity, these venues would do what they do now: give you an instant transaction but one that would have no reality on the chain(s) for weeks or maybe longer. Or maybe never.

There is no such capacity up and running or available in reserve anywhere on earth to replace what China controls. Transactions will simply not happen or some will, at best, be queued where they can be, eg., exchanges.

As it stands now, depending on where that transaction originated and went, it can at best be around 8 minutes before it is true on the chain(s). And, again, can and does frequently take way longer.

Still, if the CPC (Communist Party China/Xi jinping) decided to shut down all mining on its territory and by companies headquartered in the PRC, that would effectively shutdown all PoW crypto. I say effectively, because the relatively small amount of crypto which is block-validated/mined outside China/Chinese control would have no way of making up for a 2/3’s loss in anything but months. And, maybe not at all if the supply of ASICs and rigs (95%+ produced by China) was also stopped or even just slowed by the CPC.

There’s one other feature/fact that I wonder if you’re aware of. BloxRoute. Even the rate at which transaction replication across the chain is concentrated and accelerated (currently) almost exclusively in China. You can look up BloxRoute and what they do. But they have one enormous and concentrated set of customers: Chinese miners. It’s quite clever tech and I’ve met and spoken with Kuzmanovic, CEO, when we were both in China back in 2019. It’s a private networking infrastructure that accelerates transaction replication across chains. Really brilliant work. It would still take a massive (and otherwise completely implausible expansion) increase in mining operations in some other place, but having this would accelerate the restoration of “reasonable” transaction rates faster if used by all the (non-existent) fallback miners.

So, this is the technical reality. If you can supply any facts that suggest this is not what happens if the CPC makes the choices described, I would love to hear them. And, for all fact-based empiricists out there in crypto world (the few, it does seem to me), then I would really like to hear how they think this would play out.

THE POLITICAL PART

And then, the political/financial reality. Is this possible/likely…and WHY?

This is where, of course, things really matter. The fact that China is motivated to push crypto yet outlaw it at home for all its citizens is one that they have made no effort to hide: creating doubt and mistrust in Western Liberal Democracy (WLD). The practical foundation (skip whether you’re a fan or not) is the dollar reserve economy (DRE) and its institutional infrastructure. I assume you are familiar with China’s Belt-and-Road initiative. Massive projects are financed and largely carried out by Chinese in countries where resources and infrastructure (railroads, roads, ship ports, airports, etc.) are important to put beyond the reach of power of WLD/DRE. This means both the democratic/human rights project and its support from the DRE. This is done by issuing loans to these countries in huge amounts of Renminbi. Which most of them by and large cannot afford, yet have to convert to dollar to be able to repay. At the same time, China is moving fast to create the Digital Yuan/Digital Renminbi. And they have stated clearly that this will be used to denominate these loans already issued and future ones. And the rest is a lengthy explanation of how economics of this will work. I’m happy to take up the details of that of that with you if you are interested. But I assume you understand much of this well enough.

But how would Crypto fit into this plan? FUD. As I have pointed out before, the more crypto that finds itself into mainstream finance, the more vulnerable the system becomes to the effect a shrinkage/shutdown of Crypto mining would produce. I probably don’t need to fill you in on detail, but one thing I would point out. When a large enough number of corporate, institutional, hedge fund, and individuals are invested in Crypto (as is becoming the case) directly or indirectly, the more vulnerable both the “buy side” and “sell side” financial institutions (JPMorganChase, Citibank, GoldmanSach, BankOfAmericaMerrillLynch, MorganStanley, Citadel, BlackRock, etc.) together become. And, like it or not, they are the core of our financial system. And therefore, the more easily a massive run triggered by crypto could rock this system and … of course… create doubt and a loss of trust in the whole system. You don’t need actual failure, just enough.

ENERGY CONSUMPTION ISSUE

Since you raised it, I thought I would give you my view on this, too.

Despite still a lot of denial in the space, yes, crypto is terrible from a carbon footprint standpoint. And, I believe, it is at this point in time massively worse than that of “physical banks”, etc.

Taking this from CoinMarketCap.com, the global crypto market cap is $2.36T.

Just the U.S. banking systems ALONE is $17.9T.

And when you consider that a banking system is made up of a huge number of different products (payments, loans, financial instruments, a massive variety of services) that serve ECONOMIES, not just a bunch of traders/speculators/small-time investors and a tiny bit of payments, hopefully you start to understand that your remark about “massively worse” is, well, not-quite-empirical.

I welcome any critiques or corrections or comments you would make. I am happy to engage and exchange on a factual and empirical basis. And I am ready to take any argument that is framed this way.