>At the point that one entity controls 51% reliably and consistently, presumably users abandon the cryptocurrency altogether.
Why? There are many people that would even welcome a fully government compliant mining entity. The 'business types' like Michael Saylor. He co-founded 'Bitcoin Mining Council' which is a perfect foundation for a mining cartel. Another cofounding member is Marathon - which is already censoring bitcoin blocks according to OFAC sanctions list.
Some old idealistic bitcoin would maybe sell, but that would be the extent of a negative market reaction.
Ironically it's turning out that banning mining in China greatly accelerated centralization, because cartelization of Chinese and non-Chinese miners would be hard to achieve. Contrary to China, America thinks it has global jurisdiction, so it's possible it may try to enforce future mining laws even on foreign miners. While a miner company in eg. Kazakhstan won't be closed outright, it would mean that owners of that company would risk extradition to America if they traveled to most Western and America-allied countries. Easier to just comply. Electricity in Europe is too expensive for it to matter, so mining in America naturally dominates.
I don't actually expect that to happen, because I think bitcoin will become irrelevant long before those slow trends manifest in censorship enforced by orphaning non-compliant blocks, but in the absence of that, it looks virtually certain that the mechanisms I described would manifest as an American government-sanctioned entity that every miner, globally, has to join and comply with all rules or get its blocks orphaned.
Why? There are many people that would even welcome a fully government compliant mining entity. The 'business types' like Michael Saylor. He co-founded 'Bitcoin Mining Council' which is a perfect foundation for a mining cartel. Another cofounding member is Marathon - which is already censoring bitcoin blocks according to OFAC sanctions list. Some old idealistic bitcoin would maybe sell, but that would be the extent of a negative market reaction.
Ironically it's turning out that banning mining in China greatly accelerated centralization, because cartelization of Chinese and non-Chinese miners would be hard to achieve. Contrary to China, America thinks it has global jurisdiction, so it's possible it may try to enforce future mining laws even on foreign miners. While a miner company in eg. Kazakhstan won't be closed outright, it would mean that owners of that company would risk extradition to America if they traveled to most Western and America-allied countries. Easier to just comply. Electricity in Europe is too expensive for it to matter, so mining in America naturally dominates.
I don't actually expect that to happen, because I think bitcoin will become irrelevant long before those slow trends manifest in censorship enforced by orphaning non-compliant blocks, but in the absence of that, it looks virtually certain that the mechanisms I described would manifest as an American government-sanctioned entity that every miner, globally, has to join and comply with all rules or get its blocks orphaned.
https://www.theblockcrypto.com/post/104263/an-ofac-compliant...
https://bitcoinminingcouncil.com/