Can China Destroy Bitcoin?

In this video, I discuss whether the concentration of Bitcoin mining pools in China poses a threat to Bitcoin. After going over the differences between Bitcoin full nodes, Bitcoin miners, Bitcoin mining farms, and Bitcoin mining pools, I examine the concentration of Bitcoin hash power in Chinese mining pools. Much of this can be explained by China's cheap electricity, low labor costs, and the fact that most Bitcoin mining computers (ASIC's) are manufactured in China by Bitmain Technologies, which also owns a few Bitcoin mining pools. Bitcoin mining farms in rural areas are an excellent use of excess, stranded electricity, as well as being good employers of rural workers. The Chinese Communist Party probably fears high rural unemployment more than it does Bitcoin. Rural Bitcoin mining farms are probably bribing a lot of local government officials to protect them. If China really wanted to destroy Bitcoin, it probably would have launched an attack against the Bitcoin network back in 2017 when it cracked down on Bitcoin trading and cryptocurrency exchanges. How might China launch an attack on Bitcoin today? The Chinese government could force Bitmain to install hardware, firmware, or software backdoors in its ASIC miners that would allow the government to flip a "kill switch" or automatically send Bitcoin miner rewards to a certain address. The existence of a backdoor, if discovered, would destroy Bitmain's credibility and viability as a company, so this would only be in the government's interest, not in Bitmain's interest. The Chinese government could also attempt to launch a 51% attack against the Bitcoin network if they could gain control of 51% or more of the hashing power. Using such an attack would not make financial sense if it were used for double-spending, but it might make sense to produce a string of empty blocks and thus destroy faith in the Bitcoin network, since no transactions would be able to get through. A 51% attack would not be able to steal anyone's Bitcoin, increase the Bitcoin miner subsidy of 6.25 BTC, or increase the max supply of Bitcoin past 21 million. To bypass a 51% attack, the nuclear option would be for the Bitcoin network to adopt a new hashing algorithm to replace "sha256." This would immediately render all dishonest (and unfortunately honest, as well) ASIC's worthless for the purposes of mining Bitcoin. The Bitcoin network might or might not survive such an empty block attack and subsequent proof of work revision. CCP officials almost certainly own Bitcoin, as do the owners of Bitcoin farms and mining pools. All of the profit incentives built into Bitcoin ensure that actors are incentivized to try to profit from Bitcoin, rather than try to destroy it. That being said, there is a non-zero probability that a 51% attack on Bitcoin could permanently destroy faith in the currency, especially if the attack went on for weeks or months. This 51% attack could come from the Chinese government, the U.S. government, or another government with lots of money and a motive for destroying Bitcoin. When purchasing Bitcoin, you should size your position such that you can live with Bitcoin actually going to zero.