Bitcoin mining companies face shutdown in southwest China(en.people.cn)
en.people.cn
Bitcoin mining companies face shutdown in southwest China
http://en.people.cn/n3/2017/0601/c90000-9223021.html
83 comments
Seems to me as though Bitcoin mining is kind of a backdoor way to move Chinese money offshore circumventing capital controls. Pay for your electricity in yuan, then sell your Bitcoin anywhere in the world. In fact I speculate that may be the main reason Bitcoin mining is so popular there; it's essentially subsidized by people wanting to move money offshore. Perhaps this is cracking down on that? There's so little detail in the article it's impossible to tell.
> Seems to me as though Bitcoin mining is kind of a backdoor way to move Chinese money offshore
Which is why China is trying desperately to get control. They limit how much money their citizens can move around, whether it's Yuan, stocks or foreign currency, everything is limited and monitored. Bitcoin is no exception. Except, I think it's more nefarious than that. Bitcoin stands for everything China is against. A (mostly) anonymous currency which is decentralized? It's practically the opposite of China's ideology, a country which has strict controls on just about everything within their borders.
If I was the PRC, I'd move to damage, corrupt or if possible, destroy bitcoin. At the very least, I'd dig my claws in somehow, someway so I had some (even if it's just a little) control. But if I was China, how would I do it? I couldn't just create "The Exchange of the People's Republic of China". I'd have to do it through a proxy of some sort. There were some rumors on reddit about Chinese nationalist Jihan and his company Bitmain being such a front. I'm no tinfoil hat kind of guy, but the more I think on it, the less of stretch it seems...
Which is why China is trying desperately to get control. They limit how much money their citizens can move around, whether it's Yuan, stocks or foreign currency, everything is limited and monitored. Bitcoin is no exception. Except, I think it's more nefarious than that. Bitcoin stands for everything China is against. A (mostly) anonymous currency which is decentralized? It's practically the opposite of China's ideology, a country which has strict controls on just about everything within their borders.
If I was the PRC, I'd move to damage, corrupt or if possible, destroy bitcoin. At the very least, I'd dig my claws in somehow, someway so I had some (even if it's just a little) control. But if I was China, how would I do it? I couldn't just create "The Exchange of the People's Republic of China". I'd have to do it through a proxy of some sort. There were some rumors on reddit about Chinese nationalist Jihan and his company Bitmain being such a front. I'm no tinfoil hat kind of guy, but the more I think on it, the less of stretch it seems...
There are many who believe that the company Blockstream is a hostile takeover trying to prevent bitcoin's success. It just depends on where you read. Lots of censorship on r/bitcoin and lots of echo-chambering on r/btc.
Not that it's worth anything, but Jihan (although he has a suboptimally large amount of influence in/on the bitcoin community) has yet to demonstrate anything but a desire for it to succeed IMHO.
Not that it's worth anything, but Jihan (although he has a suboptimally large amount of influence in/on the bitcoin community) has yet to demonstrate anything but a desire for it to succeed IMHO.
I just see it as a way to resell Chinese electricity. Digital currencies do challenge state-backed currencies. They'll never fully take over until taxes are accepted in a digital currency. As a tool for circumventing taxes though, countries do view that as a threat and will clamp down hard on it.
If you want to treat it as a digital collectible and pay taxes when you sell some for a profit, great. If you want to treat it as a currency and not pay taxes, good luck.
If you want to treat it as a digital collectible and pay taxes when you sell some for a profit, great. If you want to treat it as a currency and not pay taxes, good luck.
I suspect the same when I buy goods from China on Ebay: The money is going to an ex-China Paypal account.
I may very well be paying less than cost because $1 outside is China is worth x%+ than inside of China.
I may very well be paying less than cost because $1 outside is China is worth x%+ than inside of China.
Yes. Not only that, it gets good tax and capital flow treatment in China, because it's considered "exporting".
The big Bitcoin question for the last several years has been "what will the PBOC do"? So far, they've discouraged the use of Bitcoin for transactions within China, and stopped some speculative practices at Bitcoin exchanges, but haven't really cracked down.[1] Back in February, the PBOC announced a "study period" while they decided what to do.
[1] https://www.bloomberg.com/news/articles/2017-02-10/china-bit...
The big Bitcoin question for the last several years has been "what will the PBOC do"? So far, they've discouraged the use of Bitcoin for transactions within China, and stopped some speculative practices at Bitcoin exchanges, but haven't really cracked down.[1] Back in February, the PBOC announced a "study period" while they decided what to do.
[1] https://www.bloomberg.com/news/articles/2017-02-10/china-bit...
I would be surprised if the Chinese government doesn't ban Bitcoin at some point. They don't allow their people free access to information, why would they allow freedom in monetary matters?
They certainly doesn't seem inhibited in banning things that may pose a threat to themselves. Bitcoin just doesn't pose much of a threat yet, not until it's generally useful as a payment system and for financing -- thus comprising an actual competition to the PBOC and their member banks.
They certainly doesn't seem inhibited in banning things that may pose a threat to themselves. Bitcoin just doesn't pose much of a threat yet, not until it's generally useful as a payment system and for financing -- thus comprising an actual competition to the PBOC and their member banks.
As long as all the entry/exit points are regulated and in line with the government, Bitcoin is perfect for a country obsessed with capital controls.
Far easier to monitor than cash.
Far easier to monitor than cash.
Why ban it when they can nationalize all the miners and have total (>51%) control of Bitcoin?
My Thoughts exactly. If it would repalce cash money, that would be a good motivation on top of that, as they might control the anonymity of transactions. I don't think they'd need >50% total, if only inland transactions are concerned (as would be the case with any other payment system, without further assumptions)
> They don't allow their people free access to information, why would they allow freedom in monetary matters?
The US and other major "democracies" out there are already working on restricting access to information. I believe it's called "Fake News" ...
The US and other major "democracies" out there are already working on restricting access to information. I believe it's called "Fake News" ...
Fake news is a side effect of the US' freedom. You can publish what you want.
Are you saying you don't believe Hillary drags children under their bed and eats them?
No one is saying that. Its what cost her the election.
Being the personification of a crony career politician cost her the election.
Do you believe that I think she literally eats children; or did you want to just put Hillary down?
I read most of the DNC emails, I researched her as much as a voter should. Clearly couldn't vote for her (voted a write in "no confidence in candidates") But she never ate kids; that was John Podesta.
I read most of the DNC emails, I researched her as much as a voter should. Clearly couldn't vote for her (voted a write in "no confidence in candidates") But she never ate kids; that was John Podesta.
China Bitcoin Miners Documentary: https://video.vice.com/en_us/video/life-inside-a-chinese-bit...
Mirror? Not available in Serbia, for some reason.
Bitcoin to me seems like a great currency for oligarchical/plutocratic type governance systems. Authority can know what addresses are controlled by who, give people privacy and the feeling of security, and can create a hierarchy of knowledge where people get increasing insight into the country's(world's?) economy/social graph as they reach the top of the power pyramid. All transactions are recorded for all time. Great.
Yeah but the block chain is available to everyone. So potentially anyone outside - or even worse inside - the oligarchical/plutocratic can have an idea of just what the heck is going on. Best keep that genie in the bottle.
It reminds of what some Soviet leader (Krushchev, maybe?) said when asked why he was against an "open skies" Treaty.
"We have nothing to hide. We have nothing and must hide it"
It reminds of what some Soviet leader (Krushchev, maybe?) said when asked why he was against an "open skies" Treaty.
"We have nothing to hide. We have nothing and must hide it"
Yeah, it's interesting because some alternatives like ZCash effectively solve this problem too, and provide full anonymity but they're fairly closely related and probably will get treated the same way by regulators in many places. Should be interesting to see what happens.
Bitcoin promised transparency, the opposite of privacy. Users who feel their usage is private have been mislead by others.
Is there anywhere to read about the probabilities of and implications of sweeping multinational policy around cryptocurrency/bitcoin? Also, could a country make it's own crypto currency somehow pegged to it's national currency? A lot of my friends are really deep in bitcoin now, I can't tell if I should worry or not.
Digix is working on tokens tied to physical assets. Their first product will be a token tied to 1g physical gold. A different company, Tether offers a token tied to USD.
[1] https://www.dgx.io/ [2] https://tether.to/
[1] https://www.dgx.io/ [2] https://tether.to/
Last I heard, tethers peg to the dollar was unsustainable.
I haven't checked on it lately, but Iceland had introduced their own crypto currency (Aurora coin) a few years back. It began with an initial distribution to all citizens.
>but Iceland had introduced
Not the government of Iceland, it should be noted.
https://en.wikipedia.org/wiki/Auroracoin
Not the government of Iceland, it should be noted.
https://en.wikipedia.org/wiki/Auroracoin
Worry for them? And "worry", in terms of their financial outcome?
If they have been into bitcoin for some time, "worry" might be overstated - they are probably well off - financially - as of now.
If they have been into bitcoin for some time, "worry" might be overstated - they are probably well off - financially - as of now.
> Also, could a country make it's own crypto currency somehow pegged to it's national currency?
Sure, but what would the point be? It would only be a cryptocurrency in name. No reason to go through the trouble of using a blockchain if you're just trading credit. The selling point of Bitcoin is decentralization, and pegging requires centralization (a counterparty who will transfer national currency to your account upon receiving crypto-coins).
Sure, but what would the point be? It would only be a cryptocurrency in name. No reason to go through the trouble of using a blockchain if you're just trading credit. The selling point of Bitcoin is decentralization, and pegging requires centralization (a counterparty who will transfer national currency to your account upon receiving crypto-coins).
"Sure, but what would the point be? It would only be a cryptocurrency in name."
It could be used as a way for the government to tie its own hands and thus make a more credible promise about future the rate of money creation.
Ecuador did this in 2000 via dollarization, which introduces other problems which a blockchain would not.
It could be used as a way for the government to tie its own hands and thus make a more credible promise about future the rate of money creation.
Ecuador did this in 2000 via dollarization, which introduces other problems which a blockchain would not.
You don't need cryptcurrencies to do this. I guess you can, but if that is your main reasons you will probably face more trouble than you'll solve.
Smart Contracts, if fully supported by the government, could completely remove a lot of the avenues of small-scale governmental corruption.
I'm surprised this comes out now, right in the middle of the noise about the UASF (User Activated Soft Fork) and Segregated Witness controversies.
The community is pushing to enable larger blocks among other functionalities that would cult down on the fees that miners (read: Chinese miners) collect.
Obviously the miners won't agree on that, but the network agreement depends on what the Bitcoin processing power decides, not on what the majority of the users do. At some point either the miners join, the users give up, or the chain forks in two (obviously with wildly different valuations).
I'm not familiar with People.cn, but my first reaction with the headline is that the piece of news has second intentions.
The community is pushing to enable larger blocks among other functionalities that would cult down on the fees that miners (read: Chinese miners) collect.
Obviously the miners won't agree on that, but the network agreement depends on what the Bitcoin processing power decides, not on what the majority of the users do. At some point either the miners join, the users give up, or the chain forks in two (obviously with wildly different valuations).
I'm not familiar with People.cn, but my first reaction with the headline is that the piece of news has second intentions.
THANK YOU FOR SPELLING OUT YOUR ACRONYM!!!!
So many internet idiots just use acronyms all the time on the assumption that everyone speaks the same language as them. I wish more people would take your approach.
So many internet idiots just use acronyms all the time on the assumption that everyone speaks the same language as them. I wish more people would take your approach.
This s a bit tangential, but it's not clear that larger blocks, or any other way of getting a higher on-chain transaction throughout, would result in less total fees collected by miners. The fees are set by the miners, after all.
ok heres my take on this, they do these random shut downs to keep miners on their toes. in some article it has been explained this is how china has implemented firewall policy. if they detect unknown traffic they constrict your flow gradually until you can't do anything. this might be one of those moves, not a clear restriction but rest of miners should be aware of impeding wave of problems caused by PRC oligarchs.
> Mining Bitcoins is a global effort, so even if mining is banned somewhere, the total amount of Bitcoins does not change, and so the global price will not fluctuate, an industry insider said.
This is not true. Bitcoin price swings like crazy.
This is not true. Bitcoin price swings like crazy.
Maybe they mean to say that the amount of new bitcoin mined will not fluctuate? It's true that the amount of new supply per day is roughly constant -- even if half of the miners go offline, just as much new bitcoin is produced per day.
Really? I thought the difficulty took several days to adjust. Edit: The wiki says it takes 2160 blocks, about two weeks?
It does. If half the miners went offline right after an adjustment half as much bitcoin would be mined everyday and the next adjustment would be a month away instead of 2 weeks. The number of available transactions for the month would drop by half as well.
The majority of Bitcoin mining is located in just a few geographic regions that happen to have inexpensive power. China, The Republic of Georgia (special backroom deal with the president and BitFury), North-East Canada, and parts of North-West US that have cheap hydro power.
If China is really rooting out the bitcoin mining operations, it represents a huge change in the makeup of the mining/hashing industry
If China is really rooting out the bitcoin mining operations, it represents a huge change in the makeup of the mining/hashing industry
Why does China have low cost power? I understand the others you mention, but is it from subsidies in China?
Partly because of the government building hydro plants in suitable places even if there's little to no demand.
Bitcoin mining is a trap; Better late than never;
Is it reason of btc price down ?
i say it is about time government cracks down on this tax-avoidance ponzi scheme. bitcoin is a great achievement technically but it has only negative consequences for soceity at large.
If bitcoin is a ponzi scheme then every publicly traded asset is a ponzi scheme.
most of these assets get you something. like (parts of) voting rights in a company. or the ability to sell those rights at a fixed price at some fixed date. bitcoin just offers you the right to say 'i got 10 bitc'. if you'd say every currency is a ponzi scheme that is harder to disprove. because if space aliens invade and bring their own currency, your dollars will be worth zero. all the same real central banks have the ability to adjust money supply depending on demand. which ensures that money keeps its value as long as government does not fall. bitc is worse, because it annot insure this. because it has no central bank and its supply is more or less fixed, ensuring that once demand drops, the value of bitc drops as well.
>ponzi scheme
Bitcoin is as much as a ponzi scheme as gold is.
Bitcoin is as much as a ponzi scheme as gold is.
How is it a ponzi scheme?
The whole "ponzi scheme" accusation is trotted out every time Bitcoin is brought up, and it's always by people completely unfamiliar with how Bitcoin actually functions. It's as much a "ponzie scheme" as much as any other limited-supply asset.
ponzi scheme is not to be taken literally. people say it because the people creating currencies benefit at the expense of everyone else, without offering much in return. i know more or less how it works and that is why i say this. the founders of bitcoin have huge stocks of bitcoins, artificially restricting the bitcoin supply to keep the price up. however if that was not the case the supply of bitcoin would be more or less fixed as it gets harder and harder to mine. also there is nothing of value behind a bitcoin, just people's belief it will stay valuable. because of the inherent impossibility to adjust the supply of bitc depending on demand, it cannot ever function as a currency, because its value cant be adjusted for demand. when demand lessens, as is inevitable, investors will lose their money and the major beneficaries will be those who created bitcoin and sold it for dollars.
the only real value it currently offers, is it allows people to dodge tax and launder money. it also enables the criminal economy, with things like drug-ecommerce when the government does not approve (im all for legalisation, btw). so it undermines goverment authority and enables criminality.
i get that i get downvoted because people here believe strongly in privacy and tend to dislike their governments. but i don't. you have to think about how much of your life depends on government authority in order to understand the danger anything that undermines it poses.
the only real value it currently offers, is it allows people to dodge tax and launder money. it also enables the criminal economy, with things like drug-ecommerce when the government does not approve (im all for legalisation, btw). so it undermines goverment authority and enables criminality.
i get that i get downvoted because people here believe strongly in privacy and tend to dislike their governments. but i don't. you have to think about how much of your life depends on government authority in order to understand the danger anything that undermines it poses.
Tax avoidance != tax evasion. At least get the basics right if you're going to make grand proclamations!
And you obviously got upvoted. HN is full of libtards.
And you obviously got upvoted. HN is full of libtards.
No matter what you're replying to, it never helps to post uncivilly like this. In particular, the claim that HN is full of <derogatory partisan flamebait term> is the worst kind of unsubstantive tedium.
Intervention from China will stabilize Bitcoin.
China banning bitcoin would have a huge negative impact on cryptocurrencies worldwide. But what if... that's exactly what the chinese government wants? What if this is all a scheme to short sell bitcoin?
Short selling requires a counter party. There is no short selling counter party in the BTC ecosystem that holds anywhere close to the amount that would make such a move worth it. Even if the moves china makes somehow extracted the entire wealth of the bitcoin economy, it wouldn't make much sense for them to bother.
splintercell(1)
Countries aren't usually in the business of manipulating small, illiquid markets for negligible financial profit.
BitCoin isn't illiquid. There are numerous people out there making a living out of it.
And China is one of the largest economies in the world, with well over a billion people making a living in it. The profit from shorting it would not even a bug splatter on the windshield of their economy. The evasion of capital controls is a much, much larger concern for them.
And it should be a larger concern for bitcoin proponents, too. Imagine if China decided to wage a covert war on bitcoin. I mean, is it really so hard to believe that China wouldn't like bitcoin because it literally (not figuratively) runs antithesis to their own fiscal policies?
And how would they run a covert war against it? An open war or public attack would immediately raise the defenses of everyone involved, from miners to developers, to bitcoin holders. But what if they played nice while all the while poisoning the well or setting the stage to gain trust. They could do this through third party companies (cough bitmain cough) which could cause damage to bitcoin by delaying vital upgrades and sowing the seeds of uncertainty and doubt.
And how would they run a covert war against it? An open war or public attack would immediately raise the defenses of everyone involved, from miners to developers, to bitcoin holders. But what if they played nice while all the while poisoning the well or setting the stage to gain trust. They could do this through third party companies (cough bitmain cough) which could cause damage to bitcoin by delaying vital upgrades and sowing the seeds of uncertainty and doubt.
liquidity in this case is market liquidity. like how much or little one can sell without moving the price and/or slipping your own price. Bitcoin compared to most other currencies and many stocks, has fairly low fragmented worldwide liquditity.
bitcoin at the moment supports 7 transactions a second.. that seems quite illiquid
That has nothing to do with market liquidity.
So everything Chinese government does, eventually leads to some malicious grand scheme...
The Chinese government holds $3.5 trillion in U.S. treasuries. The profit from "short-selling bitcoin" wouldn't even qualify as a rounding error to them.
If we assume the Chinese government manages to short ALL current bitcoin (16.5 million), and that the gain from shorting will be $2000 per BTC (current value is about ~2300), it'll still not be even a percentage of 3.5 trillion.
It might be insignificant to China the country. But a government is made up of individuals.
It's entirely possible that in an already corrupt environment, the dozen or so individuals on the crypto committee may be convinced to make decision that benefit them personally.
Make a few impactful decisions at your day job, block a few exchanges, short bitcoin personally, profit personally. Wouldn't be hard to make a million or two if you knew of a price fall coming up in advance, there are plenty of ways to get leverage on the bitcoin markets these days.
It's entirely possible that in an already corrupt environment, the dozen or so individuals on the crypto committee may be convinced to make decision that benefit them personally.
Make a few impactful decisions at your day job, block a few exchanges, short bitcoin personally, profit personally. Wouldn't be hard to make a million or two if you knew of a price fall coming up in advance, there are plenty of ways to get leverage on the bitcoin markets these days.
Seems like the operative gambit would be one-or-more miner/exchange pays govt official(s) lots of money to "crackdown" on BTC, except not as much on them. win-win
China is shutting down miners, Yet the price is still going through the roof.
Why would I care whether bitcoins are illegal in China? The Bitcoin network will adjust to the reduction in hash rate, and after that it will impact my use of Bitcoin as much as China's great firewall impacts my use of the internet.
China is an oppressive regime. It's standard practice for oppressive regimes to ban what they feel they can't control. If Bitcoin ever becomes really useful, they will be forced to ban it -- if they want to maintain monetary control.
China is an oppressive regime. It's standard practice for oppressive regimes to ban what they feel they can't control. If Bitcoin ever becomes really useful, they will be forced to ban it -- if they want to maintain monetary control.
Also shutting down one miner just makes the remaining miners more profitable in the long term. In the short term though ~1 week it has the effect of reducing the rate at which Bitcoins are generated until the difficulty re-target is reached.