(HorizonPost.com) – In September 2021, a group of entities in China, including its central bank and financial regulators, agreed to work together to enforce the Beijing government’s ban on the use and mining of Bitcoin and all other cryptocurrencies. According to a Reuters report, 44% of the massive computing power needed for mining operations worldwide resided there when China enacted the ban. By July, it was zero. Now, as a result of the ban, the lion’s share of Bitcoin mining happens within the borders of the United States, with a reported 35.4% of all transactions by the end of August.
A method called “mining” creates new Bitcoin when a third party verifies the validity of transactions by solving difficult mathematical problems to ensure the buyer isn’t trying to pull off a double-spending scam. Investopedia.com likens what a miner does to a person who might look at two $20 bills to make sure they don’t have the same serial numbers. This way, the seller knows each coin or token is unique.
— BitcoinAgile (@bitcoinagile) October 13, 2021
Since May 11, 2020, each bloc of problems solved earns 6.25 Bitcoin. That may not sound like much, but considering at approximately 6:30 p.m. Eastern time on October 14, a single bitcoin was trading at a few cents more than $57,540, it’s a lot of money. Of course, its value is also just a bit volatile. In the preceding 24 hours, that number was as high as $58,500 and as low as $57,000.
The good news for the US comes in the form of taxes. The country hosting the server power needed to process these mining transactions is entitled to collect taxes on net profits. It looks like China’s loss is America’s gain.
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