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C)  Still has large PoW mining facilities to be taken over or regulated by government, except in this case it's even worse of a problem than Bitcoin.  Each mining datacenter would almost inevitably be labeled as a money laundering facility by governments.  First world Cryptonote mining centers might be shut down completely, leaving only some guy in the Congo mining, which could then be easily brute force attacked by state or free lance actors.  Maybe first world mining would continue, just not in datacenters, and would be the equivalent of getting caught with a marijuana farm by the police after they notice your electric bill.

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