Bitcoin mining offers a shortcut to develop a domestic semiconductor industry
Bitcoin mining relies on cutting-edge chips, like ASICs, for efficiency. This creates unlimited demand for advanced semiconductor technologies.
Countries that dominate hash rate gain unparalleled power: control over transactions
Control over hash rate is the new arms race. The computational power securing Bitcoin's network will define global prominence.
Bitcoin mining is not just about hash rate. It’s also a great opportunity for nations to strengthen vital domestic industries.
The chip sector is the most important one.
Purchasing power will be defined in Bitcoin, and nations will compete to own as much as possible.
Owning hash rate = controlling transactions.
No mining? No influence.
Trump’s victory is the official start of the Great Power Hash Wars.
Bitcoin is now officially an important geopolitical resource.
If the US doesn't want to pay Bitcoin for Chinese goods, its only choice is to innovate and produce goods that China and the world genuinely desire.
The US will be just as reluctant to supply Bitcoin to China as Britain was with silver, but it won’t be able to rely on force
The modern Opium War seems unlikely to succeed—China’s military and tech gap with the US is far smaller than it was with Britain in the 1800s
The US may even try military pressure to force China to accept anyting but Bitcoin for their trade deficits.
The US may very well attempt economic coercion and sanctions if China demanded it only pay with Bitcoin for the trade deficit
Nations will be reluctant to part with their Bitcoin reserves, but will need vital products...
The Modern Opium War will be Fought over Bitcoin
The Opium Wars of the 19th century were about silver. The 21st century equivalent will be about Bitcoin.
In the 1800s Britain desired Chinese goods (tea and silk) but produced nothing the Chinese desired. China only wanted silver, and Britain’s silver reserves went down fast.
Britain solved this by militarily forcing China to accept opium, for which the decaying Qing society had a high demand.
With the rise of Bitcoin as the economic resource nations compete over, we might see a similar dynamic play out in the future: The US having a high demand for Chinese products, but producing nothing the Chinese want.
Reluctant to see its strategic Bitcoin reserves dwindle too fast, the US might try to force China to accept anything else but Bitcoin.
What if the US Produces Nothing the Chinese Want?
Today’s trade landscape echoes the 19th-century economic imbalance that fueled the Opium Wars. The US imports vast amounts of goods from China but has fewer products China desires in return.
China, as the “factory of the world,” produces everything from high-tech components to consumer goods.
The US further restricts exports of key technologies, like semiconductors, limiting its appeal in China’s eyes.
If China were to accept only Bitcoin, the US could face a strategic dilemma.
It will be reluctant to see its strategic Bitcoin reserves go to China and will seek to find other ways to resolve its trade balance with China.
Will the US Try to Force China, Like the British Did?
China only accepting Bitcoin will put the US in a similar position as Britain in the 1800s. Facing a trade imbalance and dwindling Bitcoin reserves is not a situation the US will be comfortable with.
What will it do about it?
Will the US try to pressure China through economic means, or might it even try to use its military to force China to accept anything but Bitcoin?
What Strategies Could the US Employ?
The US may consider various strategies to avoid draining its Bitcoin reserves.
Economic coercion is one, with the US imposing sanctions to pressure China into accepting other currencies or products. However, the trade imbalance means that China is less dependent on the US than the other way around.
Alternatively, the US might consider military pressure to get what it wants.
This is also unlikely to succeed since the military and technology gap between the US and China is much smaller than between Britain and China in the 1800s.
History Will Not Repeat Itself
The US will attempt to maintain its economic dominance, but history is unlikely to repeat itself in the same way.
What will be the same is that the US will be just as reluctant to supply Bitcoin to China as the British were to supply silver in the 19th century.
But the US is unlikely to impose its will on China through sanctions or military force. The only choice it will have is to innovate and produce goods that China and the world genuinely desire.
Another example of Bitcoin forcing nations to innovate and compete peacefully…
China only accepting Bitcoin for its exports will put the US in a difficult position.
The US restricting key tech exports to China means China is more likely to demand Bitcoin for its exports to the US
China, being the “factory of the world,” is in a good position increase its Bitcoin reserves.
The modern Opium Wars may well be between the US and China.
The US needs China's produce, but doesn't produce anything the Chinese want.
China will only accept Bitcoin but the US is reluctant to tap into its strategic reserves to address this trade imbalance.
The Opium Wars illustrate how nations are reluctant to use limited supply resources (in this case silver) to solve trade balances
The Opium Wars were caused by China resisting the destructive opium trade and Britain forcing its will on the technologically backward Qing empire
