Beating China’s “Great Firewall”

Last year, for those that don’t remember, China began taking drastic steps to crack down on crypto. As a recap, China essentially banned ALL crypto-related transactions as well as passed an outright ban on crypto/bitcoin mining.

As the ban went into effect, the country’s leading share of global bitcoin mining capacity plummeted in a matter of weeks, briefly causing widespread panic in the markets.

But today, almost one year later, data is showing the opposite.

New research from the Cambridge Centre for Alternative Finance (CCAF) shows that Chinese bitcoin mining activity has quickly rebounded. According to researchers, China now makes up about 20% of the total bitcoin mining market, meaning that China is once again a top global player in bitcoin mining, second only the U.S.

Wait.. How Is This Possible?

Because of the permissionless nature of the global Bitcoin network, “guerilla” or underground miners seem to have found ways to avoid detection – including using off-grid electricity sources like hydropower produced by small dams that aren’t connected to the main grid.

Can’t Stop, Won’t Stop

Interestingly enough, underground mining is not the only way the citizens of China are circumventing the strict surveillance of the CCP and their guidelines against the use of crypto. Take a closer look:

NFTs: As Chinese internet censors have stepped up efforts to scrub content from social media during the pandemic, web users have increasingly turned to NFTs as a way to secure images, videos, audio & social-media posts on a blockchain to prevent their deletion. As WSJ reported, for example, hundreds of NFTs are now listed on OpenSea without a price tag, a sign they aren’t really intended for sale. Used properly in conjunction with other technologies, NFTs offer a way to preserve data-rich media on the blockchain – an interesting NFT use-case that many (including us!) have failed to recognize

IPFS: Censorship activists are also turning to decentralized web protocols like Filecoin’s (FIL) InterPlanetary File System (IPFS). Via IPFS, files can be stored, scattered across the network, and encrypted, in turn making it difficult for authorities to remove or block content. IPFS can also help Chinese residents gain access to millions of books, scientific articles, and other banned works.

Furthermore, Cloudflare, an internet infrastructure company, recently announced new tools to make it possible for users to host and serve content on IPFS. According to Coinbase Bytes, around 2.5 billion gigabytes of highly censorship-resistant data is already hosted on decentralized IPFS servers. That’s the equivalent of tens of thousands of copies of Wikipedia.

Putting It All Together:

As the CCP continues on their path to track the digital footprint of every single one of their citizens, and individuals attempt to circumvent the surveillance, it will be interesting to see how crypto’s open-source and decentralized landscape plays a role in China’s “Great Firewall.”