China Central Bank Prepares To Regulate Bitcoin Mining

Not long after bitcoin soared by over $1,000 in a matter of minutes, when it was revealed that Peter Thiel had invested in the cryptocurrency, overnight bitcoin experienced some weakness after a report in the QQ.com news portal, subsequently confirmed by Reuters, that China's PBOC had held a meeting to regulate bitcoin mining power use, an increasingly sensitive topic now that global bitcoin energy consumption is greater than what Qatar uses in a year.

According to QQ.com, the PBOC called for rectifying irregularities in electricity use of some bitcoin mining fields, and during a closed-door meeting, discussed limiting the power use of bitcoin mining.

As Reuters further details, while the People’s Bank of China can’t directly regulate bitcoin miners’ power usage, it can ask local authorities to do so, the central bank told members of the Leading Group of Beijing Internet Financial Risks Remediation at a meeting at the end of 2017, the source said.

As a result, China's monetary authority can tell local governments to regulate the power usage of bitcoin miners to gradually reduce the scale of their production. To many this was an implicit warning that China is preparing to clamp down on, and regulate, bitcoin mining in China.

While China is one of the world’s biggest sources of bitcoin mining, the intensive use of computers for bitcoin mining has boosted demand for electricity, leading to price spikes and increases.

To be sure, China's disdain for bitcoin - a mechanism which the locals eagerly use to bypass local capital controls is hardly new - in September China ordered all initial coin offerings to cease and all cryptocurrency trading exchanges to be shuttered with the aim of containing financial risks. Bitcoin miners have feared that they could be the next target.

At the meeting, the PBOC said development of bitcoin mining will be limited, according to the source, who declined to be named as he is not authorized to speak on the matter.

News of the mining crackdown hint sent bitcoin modestly lower.

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Putting global bitcoin energy consumption in context, according to Digiconomist, the current estimated annual electricity consumption to mine bitcoin is just under 37 TW/h per year, just above the annual energy consumption of Qatar, and below that of Peru.

 

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Separately, also overnight China's official People's Daily newspaper once again called Bitcoin a "bubble', writing in an article  that the so-called scarcity, high liquidity, decentralization of bitcoin are all excuses for speculation, and can not support its fast. The article warned that extra caution is needed on future moves of bitcoin, given that the cryptocurrency once saw sharp falls before. One could of course say the exact same thing about not only Chinese stocks, but everything else traded in China, which as discussed previously on these pages, is merely a rolling bubble for the local gambling and momentum-chasing population.

Comments

HenryKissinger… bcking Wed, 01/03/2018 - 08:09 Permalink

btw, has ANY of you tylers read :

-Kevin Kelly 's 1994 book "Out of Control: The New Biology of Machines, Social Systems, and the Economic World" (chapter 12 E-money) or

-NSA 's 1996 "HOW TO MAKE A MINT THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH"

bitcoin started in 2009, so think about it.

http://kk.org/mt-files/books-mt/ooc-mf.pdf
###############################
Iceland welcomes the miners and associated jobs.

they should put the miners in standardized container setup... just in case governments keep changing their fears

 

FYI: Iceland has unlimited geothermal energy and unlimited cooling, hence they could easily power all the world servers ...

In reply to by bcking

bcking macholatte Wed, 01/03/2018 - 08:41 Permalink

How about all the wasted money, effort, time, resources in fuel, electricity, destruction of the earth from gold and silver mining? How about the waste, fraud, power and resources spent just printing and supplying paper money? 

In reply to by macholatte

affirmed_78 bcking Wed, 01/03/2018 - 09:45 Permalink

No kidding.  This electricity usage thing is a total farce.  What's the global energy consumption needed to power laptops in order for people to watch cat videos on youtube?  I mean seriously, get a fricken life.  What's more important than a decentralized, censorship resistant currency outside the reach of nation states?  People are too busy following the Kardashians to notice.  He who controls the money controls the world.  But what if money is not controlled by any single entity?  Then you've got something -  Bitcoin.

In reply to by bcking

MagicMoney affirmed_78 Wed, 01/03/2018 - 20:24 Permalink

Bitcoin consumes a lot of electricity with poor transactions speed. The fact you need an ASIC just to mine shows how inefficient and poor Bitcoin is at handling transactions. Do you need an ASIC to watch Youtube videos? No, you don't. You can watch them on your smartphone. You can't mine Bitcoin on smartphones but you certainly can watch Youtube videos on them.

In reply to by affirmed_78

Laowei Gweilo bcking Wed, 01/03/2018 - 08:17 Permalink

China and Russia both taking strong steps to regulate or outright stop cryptos.

It's not about moving anywhere. You don't just 'move' that sort of volume or capacity. It impacts not only BTC demand (therefore price) but even the computational power that sustains the entire market.

Go look at a mining-weighted map of what countries sustain the mining of BTC and therefore all of BTC -- you don't just pick that up and move it to Turkmenistan.

1 country, yeah, BTC can prosper without Chinese traders. But now a big hit to Russian traders, and now also possibly Chinese miners. Now we're starting to talk multiple serious national efforts against BTC, and we're not talking about the US or France lol but the BRICs. There's an irony for you. 

Even just this, hey it's still OK. But eventually these risk turning into momentum. If Korea joins China and Russia and expands it's already confirmed BAN on all bank trading to other bank activities, then you're beginning to look at serious damn volume AND mining that can just be 'moved.' You got a market basically being helped up purely then by a few thousand US hodler purists whales and Japanese salaryman speculators -- AND the possibility of real nationalized competition. 

If China significantly takes off the grid a decent portion of Chinese mining, Korea expands its bans or taxes in any way, AND the proposed Crypto-Ruble goes live, just watch how fast the speculation abandons ship. It'll make recent Ripple moves look like nothing but a ripple. 

BTC has been remarkable strong but we're looking at risk that looks like the Chinese exchange ban but on 3 different fronts: chinese mining, russian traders, and korean banks.

And if ANY of those three nationalize there own crypto, watch our fast their volume and mining.

You'll have a BTC market help up by McCafe and Thiel or Japanese salaryman selling back and fourth to one another until one of them decides they don't want to buy it back. 

I'm mostly still bullish on BTC... Just to clarify. But the naivete of saying 'it'll just move' reminds me of how retards on MSNBC used to talk about housing back in 2006. BTC is not invincible. It could just as easily be the AOL or Nortell of the blockchains as it could be the MS or IBM. Heck it could be the AOL of 1996 even, lots of money to be paid yet. There is zero fundamental reason it could not go to 0 while a technologically far advanced crypto or a nationalized crypto backed by a country like Russia or China (if how blindly people accept Ripple's centralization is any indicator). It can survive serious Chinese regulation on mining, but it won't do it 'just by moving.' It's a serious threat.

 

In reply to by bcking

The_merovingian Laowei Gweilo Wed, 01/03/2018 - 08:49 Permalink

If China was to stop mining entirely today, it would take about 2 weeks for the network to adapt by reducing the difficulty. The BTC global network is strong enough to just keep going without them.

It’s a massive boon for miners elsewhere who were facing unfair competition out of china where miners were either stealing power outright or it was heavily subsidized by the state.

Btw, have a look at where most of the Bitcoin Cash mining power is located. It may not be a problem for BTC but it could be for Bcash and Jihan in particular.

In reply to by Laowei Gweilo

Rothbardian in… Laowei Gweilo Wed, 01/03/2018 - 09:02 Permalink

BTC ends up being the whipping boy for our feudal leaders around the world who don't understand cryptocurrency beyond the lizard brain comprehension of "this thing makes me less powerful over my serfs".  As such, I'll reiterate that they WILL come for it.  Any crypto that is essentially a hedge to fiat as a digital store of value will be in trouble.  Conversely, any coins or tokens that have connection to a technology that actually DOES something will likely survive.  Just my .02 XRP.

In reply to by Laowei Gweilo

zebra77a bcking Wed, 01/03/2018 - 10:11 Permalink

This ironically will not really affect price..

However it will actually <SPREAD> bitcoin here's how it's going to happen.

China will block the powergrid to the ASIC miners..

  - ASIC Miners will stop hoarding their AntMiners and flood the market, as they figure out it's more profitable to sell the miners than keep them in country. ASIC mining will continue underground all over China..  (hidden space heater Antminers will replace regular spaceheaters..)

  - ASIC Mining gear will scatter around the planet to everyone that has been waiting MONTHS to get their hands on them.

  - ASIC Mining will go all over the world with 1000's of mini-farms popping up.

Subsidized electricity will be removed around the world  as miners will seek out any geo-location that will give them cheap or free power..

This is like using a high pressure water hose on a grease fire.. Let's see how that works out for them..

 

Bitcoin and the cryptos have become the new digital 'drug' it's minting millionaires by the hour, and those people are attracting more people etc.  With only 0.4% of the world estimated to hold crypto as this time, HUGE market pressure will continue for another 3-5 years. This  will never be stopped until a world-wide shutdown of the internet for at least a year is undertaken.

Good luck to them.

You crypto-haters can go ahead with your 'it's not real butter' flameout attack on bitcoin...

 

In reply to by bcking

random999 bcking Wed, 01/03/2018 - 10:58 Permalink

Well if you ever lived in china you would have noticed the smog.

When you notice the smog it does make sense to not spend the electric consumption of Qatar on something as retarded as mining cryptocoins.

Dont get me wrong, I like cryptos and Im actually mining myself. But its still fucking retarded how all this energy is wasted on nothing. Not to mention its all run by coal power plants in china.
 

In reply to by bcking

MagicMoney bcking Wed, 01/03/2018 - 20:37 Permalink

Sure they could just move on to a more expensive country to do mining which still the threat of even those countries cracking down on Bitcoin mining. This is exactly why Bitcoin is not digital gold. Gold does not need mining of any kind just to move your gold around.

If miners find it too expensive to mine because of regulations, cost of electricity, and the general difficulty your "digital gold" is literally in their hands. They can be subject to centralization. Again it is in their hands. What can you do with Bitcoin without cooperative miners? Nothing. You can't move it so what good is it? 

Another reason why Bitcoin isn't digital gold is that for any changes to occur the community relies on consensus. The consensus could determine that expensive Bitcoin is the way to go. Subject to the internal politics of the most influential within the community which doesn't make it digital gold. If it ain't digital gold it ain't currency either.

In reply to by bcking

silverer lester1 Wed, 01/03/2018 - 08:42 Permalink

In a sense, that's correct. But what we are really seeing here is inflation. The more digital currency that is produced, the more places to sink dollars. It's just like printing more money. This digital inflation will eventually destroy crypto currency value per unit in dollars, because unlike gold, it can be created and produced for practically free. Think that won't be abused, just like the Fed abuses the dollar? Count the number of cryptos out there now. Everybody will have a "better one". Eventually, when you get to 10,000 different ones, what do you think they'll be worth?

In reply to by lester1

zebra77a silverer Wed, 01/03/2018 - 10:41 Permalink

It will follow the Pareto Principle - 95% of the wealth will sit inside 2% of the cryptos, and the rest will be funnycoin / token / worthless. 

What keeps the curve from tightening is that many new cryptos are constantly 'selling themselves' with new features, faster transaction times etc.

Eventually one of the cryptos will become a game changer in terms of ability to make efficient distributed computing, supply fast transaction times, evade taxation and burdensome regulation and allow p2p direct exchange (negating the exchange monitoring and fraud).

Because crypto is now BIG MONEY, market forces will find this crypto, and flow into it, that takes time because the humans behind the spending must sort the crap-cryptos from the real new technologies..

Bitcoin will always remain a 'grandfather' and 'reserve crypto' simply because of the large amount of ASIC development that went into mining and finding it..

In reply to by silverer

bshirley1968 bcking Wed, 01/03/2018 - 09:10 Permalink

Sometimes you are funny but mostly you are just way over the top.
BTC is dead. Much better tech out there. At $700 billion overall market cap, BTC is now down to 37% of that. It was 67% two months ago. If you are going to "pump" something and act like you are all cutting edge and such, then try getting up to speed. You smack down on "old gold bugs" when you are just an "old Bitcoin-er".

In reply to by bcking

bshirley1968 affirmed_78 Wed, 01/03/2018 - 09:56 Permalink

I'll address all three of you losers.

Market cap shows money flow. Money has been proportionately flowing out of BTC. Why? It's dead.

Technology? BTC is super slow and fees are outrageous. That is a double was my against what it was supposed to be. BTC is so Atari.

Security and centralization? Most all crypto is decentralized. Ripple is the exception. There are crypto that are truly secure (Monero, Verge, Dash, Komodo) and BTC ain't one of them. No anonymity on BTC.

You boys must be some real crypto oldtimers.

In reply to by affirmed_78

bshirley1968 Nature_Boy_Wooooo Wed, 01/03/2018 - 10:11 Permalink

Your generalizations and demands that everyone else explain the "tech" for you is telling.

The big "technical" differences revolve around scalability and transaction speed. BTC is weak in both departments. Any crypto rookie knows this. Ethereum processes over a million transactions a day, while BTC is stuck at 300k, maybe. Guess I need to be a tech genius to know why, right? Ripple's market cap has gone up around $85 billion over the last 2 weeks while BTC has been flat to down. Ethereum has gone up about $30 billion. I could list other, but hey, you know the "tech", and the rest of us are idiots.

I can assure you that by the end of the year there will have been much better plays than dead ass BTC. Even 2017 saw ETH and LTC with 12,000% gains while BTC squeaked out around 2000%. Keep riding that dead horse.

In reply to by Nature_Boy_Wooooo

Nature_Boy_Wooooo bshirley1968 Wed, 01/03/2018 - 10:27 Permalink

Software engineers understand that it is better to compress music files into MP3 format than it is to make a bigger hard drive.

 

Just imagine if Apple would have pushed for bigger hard drives instead of MP3...... skinny jeans would not exsist.

 

Increasing memory is lazy. Real software engineer ("tech people") develop software solutions that take time to develop but are for superior solutions to walking around with a brick in your pocket.

 

Bitcoin is the tech that all of the lazy developers copy.

In reply to by bshirley1968

52821740 affirmed_78 Wed, 01/03/2018 - 10:40 Permalink

http://www.theage.com.au/business/markets/criminal-underworld-is-dropping-bitcoin-for-another-currency-20180102-h0co06.html

Seems the Bitcoin fans are wrong about it being more secure than the alternatives.  Apparently criminals are now favoring Monero (and others) due to its encryption of recipient addresses and transaction amounts and considering that Bitcoin transactions can be tracked...

In reply to by affirmed_78

Precious Hawk Wed, 01/03/2018 - 08:20 Permalink

I guess it depends on your perspective.

If you bought bitcoin at $0.001 a few years ago you might be happy.

If you bought one at $16,500 last month you might not be quite so happy.

It now costs more than $3,000 to mine a bitcoin, on average, I am told.

Before they were virtually giving them away as game tokens in a mining app.

Has anybody had their computer impounded by the police, with their wallet/password details on?  I guess that has yet to come once the cops get up to speed with their roadside stop&steal raids.

PH

 

 

bcking BarkingCat Wed, 01/03/2018 - 09:43 Permalink

The main difference is he was a stupid dick. I've been a miner since 2012 and have seen it all at this point. My first mined Bitcoin was around $250. Dipshits everywhere were telling me "It's a bubble" or "Tulips". I actually used to have a job and a boss back then. Keep spilling your wisdom on me, it actually helps to get the pulse of the retards out there.

In reply to by BarkingCat

bshirley1968 bcking Wed, 01/03/2018 - 10:01 Permalink

Your hubris is thick. You are like some minimum wage, ghetto dweller that won some lottery money, and is now everyone's financial advisor.......for a weekend.

When you make a little money and start feeling like you have taken an "evolutionary" step above your fellow humans, it's a sure sign you can't handle it, and your money usually goes like it came.....quickly.

In reply to by bcking