Happy Year of the Monkey!

As the Year of the Monkey begins, it’s important to remind everyone just how important China is to the bitcoin ecosystem.

Not only is it the country where most new bitcoins are produced, it’s probably also where the price is made. For years now we’ve seen bitcoin rise and fall on news coming from mainland China, sometimes dramatically.

The news that can send bitcoin either soaring or crashing may be a big policy announcement from the Chinese government — or it could just as easily be a rumor circulated on a Chinese social network like QQ, Weibo or WeChat.

It’s essential for anyone who wants to understand bitcoin to also understand China, and watch what goes on there closely.

Looking for the commerce boom

The irony is that, while China dominates mining and trading activity, actual bitcoin commerce is quite low. There are few of the bars, restaurants and small businesses accepting bitcoin that have become common in the US and elsewhere.

How long will that last? Bitcoin seems primed for adoption in an economy like China’s, where millions of people would like better access to banking and financial services, and are looking for better deposit and investment options.

Companies like Bitbank and HaoBTC are beginning to offer those services, and in bitcoin. Those looking for green shoots of bitcoin adoption should be keeping a close eye on those and similar startups.

Mining power

It’s a well-known fact that much of the world’s mining activity is based in mainland China.

Four of those five largest mining pools are operated from China, and/or from Chinese companies. They are F2Pool (aka Discus Fish), Antpool by Bitmain, BTCC Pool by BTCC, and BW.com.

At the time of writing, those pools had mined 72.73% of all new bitcoins in the past 24 hours: