In the free market, a cartel's attempt to increase profit by reducing output is doomed to fail; it improves profit for those outside the cartel and those inside the cartel who want to cheat.
A cartel can work -- but only if it is supported by regulation (often instigated by large actors themselves in a struggling submarket) and the coercive power of the state.
In bitcoin we have none of that, and can not have due to the mechanics of proof of work. It means anyone can mine, anywhere, in any jurisdiction.
It means if the mining industry is attacked in one nation state, or an attempt to organize a cartel in that nation state, it will immediately be outcompeted by miners some other place. If it is shut down in one country, it will be replaced somewhere else, and if that can not physically be accomplished immediately, the price per hash will increase, reducing the rate of hashing to equilibrium with the coin price. And bitcoin will continue as if nothing had happened.
In fact, any intervention into mining can only decrease the profitability of the mining outfits attacked, or taken over. Any purpose other than striving for the best mining economy, will leave that miner in the cold.
The key is the global aspect of the system, and the low barrier to entry, mining does not have to be spread evenly, and need not be located where the users are. We can absolutely have mining in china, no users, no mining in europe, but all the users.
My evaluation of the opec oil producers cartel -- since oil production is international, there is no jurisdiction that can support the cartel with coercion. Crazy evil action from enemy states can distort production some place, if so it will pop up another place, and the production quota is obviously never heeded by anyone. Here, as in all cartels, for any actor it is profitable that the other actors reduce production to raise the price, then to increase production for himself under the higher prices. Opec is just a club of big talkers.
In another submarket, downstream oil: From a story about Standard Oil, https://ari.aynrand.org/issues/government-and-business/capitalism/Vindicating-Capitalism-The-Real-History-of-the-Standard-Oil-Company/
"The failing refiners were neither the first nor the last businesses to be in such a situation. And, like many before and after them, they tried to solve their problems via cartels: agreements among producers to artificially reduce their production in order to artificially raise their prices. Rockefeller, hoping for stability in prices and an end to the irrationality of others refining beyond their means, joined and supported two cartels. This move was disastrous — the worst of Rockefeller’s career."
"Cartels are generally viewed as evil, destructive schemes because they are overt attempts by a group of businesses to increase revenues by raising consumers’ prices across an industry. In and of itself, however, seeking higher prices for one’s products is not evil; it is good. The problem with cartels is not that they seek higher profits, but that they shortsightedly attempt to generate them by non-productive means. So long as the economic freedom to offer competing or substitute products exists — as should be the case — such a scheme is bound to fail."
Another read covering the same: https://mises.org/library/antitrust-policy-both-harmful-and-useless
So, no centralization risk
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source https://www.reddit.com/r/btc/comments/dg61az/why_the_risk_of_mining_centralization_does_not/
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