Chris Larsen, the Co-Founder and Executive Chair of Ripple, penned an op-ed yesterday in the popular D.C. news periodical ‘The Hill’, the audience of which is generally composed of U.S. lawmakers and policymakers in Washington D.C. His topic was titled, ‘The tech cold war is here – and the US isn’t winning”. Ripple’s headquarters are located in the Bay Area and recently, Larsen had made some very generous donations in concert with Ripple to assist with the Covid-19 pandemic.
Larsen describes that a focus on 5G and AI should not overshadow the threat from China with digital currencies and blockchain technology. According to Larsen, the Chinese Government has subsidized vast amounts of energy needed to fuel cryptocurrency “miners”. According to Larsen, “…at least 65 percent of cryptocurrency mining is concentrated in China, which means the Chinese government has the majority needed to wield control over those protocols and can effectively block or reverse transactions”.
Larsen cities an article on how China has more than 65% of the global bitcoin hashrate, although the University of Cambridge Centre for Alternative Finance (CCAF) that conducted the report explained the overall hashrate in the study “may not be fully representative”. The CCAF commented their study “…represents only a little more than a third of the total hashrate” and all the data is provided by three Bitcoin mining pools that are all headquartered in China. The CCAF hopes to provide a more in-depth report in the future that can “…add data from major mining regions such as Siberia in Russia, Washington and New York States in the US, Québec and Alberta in Canada in upcoming reports”.
Still, Larsen argues in his opinion piece to policymakers the dangers that exist were China to take over the Bitcoin protocol. “It’s not hard to imagine a dystopian future. A U.S. defense payment to an ally could be blocked or reversed”, says Larsen.
Larsen also argues that U.S. regulators should move to Silicon Valley. Seeing the region as a ‘powerhouse’ for the U.S. regulations should also be eased for blockchain technology here in the U.S. Although Larsen does not describe which ones, he explains regulators have only blessed two blockchain protocols.
Ultimately, Larsen’s argument that the ‘Cold Tech War’ with China is one the U.S. must take seriously and betting on blockchain technologies used by American companies can be an appropriate response. Needless to say, it appears Larsen’s point-of-view would be strengthened by a broader research of the hash rate for Bitcoin for policymakers to better understand this threat from China.
Disclosure: I own some Bitcoin, Ethereum, and XRP.