Bitcoin Plunges As China's Sichuan Province Pulls Plug On Crypto Mining (gizmodo.com) 102
An anonymous reader quotes a report from Gizmodo: Bitcoin continued its dramatic plunge to $32,281 Monday morning, down 17.65% from a week earlier as some of China's largest bitcoin mining farms were shut down over the weekend. The bitcoin mining facilities of Sichuan Province received an order on Friday to stop doing business by Sunday, according to Chinese state media outlet the Global Times. The Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau issued an order to all electricity companies in the region on Friday to stop supplying electricity to any known crypto mining organizations, including 26 firms that had already been publicly identified, according to the Global Times.
It seems that some local miners were optimistic that Sichuan's abundant hydroelectric energy would insulate the region from a cryptocurrency crackdown by authorities, but that optimism was obviously misplaced. "We had hoped that Sichuan would be an exception during the clampdown as there is an electricity glut there in the rainy season. But Chinese regulators are now taking a uniform approach, which would overhaul and rein in the booming Bitcoin mining industry in China," Shentu Qingchun, CEO of a Shenzhen crypto company told the Global Times. Videos on social media sites purported to show miners in Sichuan turning off their mining machines and packing up their businesses. Miners in China are now looking to sell their equipment overseas, and it appears many have already found buyers.
It seems that some local miners were optimistic that Sichuan's abundant hydroelectric energy would insulate the region from a cryptocurrency crackdown by authorities, but that optimism was obviously misplaced. "We had hoped that Sichuan would be an exception during the clampdown as there is an electricity glut there in the rainy season. But Chinese regulators are now taking a uniform approach, which would overhaul and rein in the booming Bitcoin mining industry in China," Shentu Qingchun, CEO of a Shenzhen crypto company told the Global Times. Videos on social media sites purported to show miners in Sichuan turning off their mining machines and packing up their businesses. Miners in China are now looking to sell their equipment overseas, and it appears many have already found buyers.
Ah yes (Score:4, Funny)
Plunges to levels not seen since *checks browser tab* June 8th.
Re:Ah yes (Score:4, Interesting)
It was also at $60k in March 2021. And... $10k in August 2020.
People talk about BTC as the next big thing in investment, like its sudden explosion in value didn't began 5 minutes ago. Kids, this is what a speculative asset bubble bursting looks like.
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It's an experiment not a bubble.
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BTC is totally traded as a speculative asset. No one uses it as currency.
And yes, that asset growing 6x in value in the span of three months is what makes it a bubble.
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No one uses it as currency.
Apparently that's not true [slashdot.org].
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BTC might do the trick for a small coast town in El Salvador (population ~3000) with literally no banking infrastructure, but that's hardly a reality for the rest of the planet.
Between the fact that BTC is inherently deflationary, how everyone trades it waiting it to go up every month, and having regular value swings in double digits percentage, it is dead on the water as proper currency.
Yeah, yeah, that story appear on Slashdot. Also, when we take the time to really read the details, we see that BTC is not truly being used at all in the transactions.
Re:Ah yes (Score:4, Interesting)
Actual bitcoin transactions are rare because the entire system can only support about 4 per second.
That's all of bitcoin, all over the world.
Those people buying things with "Bitcoin" are mostly trading pseudo-coins.
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BTC might do the trick for a small coast town in El Salvador (population ~3000) with literally no banking infrastructure, but that's hardly a reality for the rest of the planet.
I'm not even sure it can work for them, the El Salvador thing is just an announcement by somebody in government who doesn't really understand anything about hard-coded Bitcoin transaction limits.
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The IMF is already involved, while El Salvador seeks refuge under the embrace of the World Bank petitioning them for help,
Cook (Score:2)
A bubble, followed by a bigger bubble followed by an even bigger bubble is a clear indication something is cooking ;-)
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Right, why would anyone spend a Bitcoin as a currency? It gains more value when in your wallet than when you spend it. This is fully opposite of a natural currency (which devalues and so you are incentivised to spend it). Bitcoin does not behave as currency but a a sort of an asset (as long as people are eagelry buying it).
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It's an experiment not a bubble.
BTC is an experiment (one that I'm very interested in). The speculation going around it by the crypto-bros who insist in having a face-to-face conference in the middle of the pandemic, acting like juveniles screaming "to the moon" and tweeting 'HODL" to be edgy, that's a bubble.
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It's an experiment not a bubble.
Better talk to the people who believe it's an investment.
Bitcoin is a toy, and it's like Gold. Violent and unstable swings.
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It's an experiment not a bubble.
Better talk to the people who believe it's an investment.
Bitcoin is a toy, and it's like Gold. Violent and unstable swings.
Unlike gold, which has a utility value outside of being a store of value, Bitcoin is useless.
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It's an experiment not a bubble.
Better talk to the people who believe it's an investment.
Bitcoin is a toy, and it's like Gold. Violent and unstable swings.
Unlike gold, which has a utility value outside of being a store of value, Bitcoin is useless.
For sure, bitcoin is the fiat fiat. Based on nothing, and nothing to back it up. What could go wrong?
Gold does have a use. But so many people have lost a hellava lot on it. I've been getting emails lately trying to get people to turn their 401K's into Gold. New suckers born every minute, but they'll parade the one or two people who made something like everyone becomes a mega millionaire.Meanwhile, most will lose a lot of money
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All bubbles can be super profitable. You just gotta know exactly when to get in and out.
Your gains are being subsidized by the poor sap who bought 6 months after you.
Re:Ah yes (Score:5, Funny)
Yep, remember there's people out there who bought at $60,000.
They've lost nearly 50% of their money*. Try asking them how their investment is going.
(*) So far...
You gotta know when to hold 'em [Re:Ah yes] (Score:2)
All bubbles can be super profitable. You just gotta know exactly when to get in and out.
Your gains are being subsidized by the poor sap who bought 6 months after you.
Also, know when to walk away, and know when to run.
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"You just gotta know exactly when to get in and out."
Except that nobody does actually know without insider knowledge, and that's typically illegal.
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Yeah, i was being facetious :)
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Plunges to levels not seen since *checks browser tab* June 8th.
I hear you, but it's a bit more than that. The plunges from the last 6-8 months have pushed back valuations to levels seen back in 12/2020 - 01/2021. As far as assets go, it's quite a plunge. But, as you remark, people act as if no one has seen these BTC values before (kinda like Dory from "Finding Nemo.")
To me, this is good. It sucks for Chinese citizens being denied the right to mine (I guess the CCP cannot have its citizens having a store-of-value independent of party's manipulation).
OTH, it forces
Seems counter intuitive (Score:3, Insightful)
You'd think that with fewer coins being mined, the existing coin value would increase.
But I guess that's why I am not an economist...
Re:Seems counter intuitive (Score:5, Informative)
Mining is constantly required for transactions to happen, not just for new coins to be minted.
A smaller mining network means that BTC becomes less useful as currency. It already takes like 20 minutes to materialize transactions as things are today.
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Bitcoin's low transaction rate is a huge problem, but this is not one of the core reasons why. The difficulty of mining is dynamic. It's adjusted every 2-ish weeks so that on average one new block is mined every 10 minutes. This is good because it (eventually) nullifies the problem you're describing, but it's quite bad because it means that the on-chain transaction rate of Bitcoin cannot scale up as the network grows.
Bitcoin Network Difficulty [blockchain.com]
Re:Seems counter intuitive (Score:4, Informative)
The network self-adjusts the difficulty algorithm as miners are added/removed. So with the reduction of a large number of miners, the difficulty will scale down to a level that maintains the average "mining" time. It's still a shitty method, but they did account for this.
Go Nano!
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Market uncertainty? It tend to lead to sell-offs which depresses the price.
I may be wrong but that's my guess.
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That would be true if we were talking about, say, coffee. If a major coffee source outlawed coffee production then the price of coffee would soar as people bid against each other to obtain coffee to drink.
But Bitcoin isn't something you buy to use; it's something you buy to sell later. Prices are determined by people's feelings about Bitcoin's future value. Anything which sounds like bad news is going to be followed by a transient drop in price. To be honest if you played that game, when other people a
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Bitcoins mined in China are useful to Chinese who would like to extract wealth from China. You can buy some bitcoin from a local miner in local currency or assets, then sell it to someone overseas for currency or assets in that country. China cracking down on bitcoin mining makes that less attractive and, since it's a big part of bitcoin's utility and bitcoin's value is highly speculative, that could decrease the price in general.
It's usual financial market gobbledy gook though. The price of bitcoin is rema
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Buying and selling most mood altering drugs in the US is illegal, unless you have the required license, but despite the US government spending something like a trillion dollars and fifty years cracking down on it, it continues to happen a fair amount. Stacks of bills do seem to be a fairly common feature for sure.
China cracking down on bitcoin, whether local supply or demand, would make a blackjack and hookers holiday look more attractive for sure, thereby reducing interest in cryptocurrency.
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You can buy some bitcoin from a local miner in local currency or assets, then sell it to someone overseas for currency or assets in that country.
Its not coal lol... and whos mining and then selling bitcoin for less than the market rate?
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Right. Coal would probably be easier to get in China. It's not illegal, and China imports shitloads of it. Problem is, you can't export significant amounts of it easily, at least not as an individual looking to stash some assets abroad.
Bitcoin is illegal in China, and there's no easy way to import it. But it's trivial to export and has the killer feature that you can convert electricity into it.
There's a reason so much bitcoin is mined in China, and it's not cheap electricity. How exactly do you think someo
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You'd think that with fewer coins being mined, the existing coin value would increase.
The same number of coins are being mined. The effort to mine them has decreased.
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Thanks. I learned something new today.
It's not just mining (Score:2)
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Why would it get more expensive to take bitcoin? The price of transactions goes up with the volume of transactions, not the number of machines on the network.
Re:Seems counter intuitive (Score:5, Informative)
You'd think that with fewer coins being mined, the existing coin value would increase.
But I guess that's why I am not an economist...
Nope. Bitcoin self-adjusts the work requirement to always produce a fixed number of coins per hour.
Adding or removing miners doesn't change a damn thing.
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Are you saying we could shutdown this entire fucking global stupidity burning enough power to run an entire western country and replace it with one computer running an old graphics calculator?
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The network adapts so a new block is added around every 10 minutes or so, the difficulty adjusts depending on the hash rate. As miners go offline, the difficulty gets easier to maintain the block rate.
This keeps the transaction rate constant (you still have to wait around 6 blocks for it to be confirmed-confirmed solidly).
In theory, nothing should happen to the network, in pra
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That only works when a price is set by supply and demand. Bitcoin's price has nothing to do with supply and demand. It's set speculatively with a value completely decoupled from any current supply.
Not paying attention (Score:2)
It seems that some local miners were optimistic that Sichuan's abundant hydroelectric energy would insulate the region from a cryptocurrency crackdown by authorities, but that optimism was obviously misplaced.
Do these guys not understand that they live in an authoritarian state? Of course the authorities would know who cryptocurrency miners are. Maybe if they had paid more of the higher ups in the government a larger cut of the profits they would still be in business.
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Weirdly, authoritarian states still have criminals and corruption.
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And a lot of them are in government.
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Ethereum is also going down (under $2k right now), which means it can take over a year to recoup costs on GPUs for mining. If you go to eBay you'll find used/scalped prices already, albeit slightly, dropping.
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Bitcoin hasn't used graphics cards in many years.
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Other crypto still does though and all the prices move in tandem with the Tether scam. Superimpose the charts and they all look the same.
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While no one is seriously trying to mine bitcoin with cards, there's a bunch of crypto you can mine with CPUs, with hard drives... and more importantly, with graphics cards. Because bitcoin being expensive means that all other crypto are expensive, everyone begins mining when bitcoin goes up. And this reverses when it goes down.
And nothing of value. . . (Score:3)
And nothing of value was lost.
Rather, we can all breathe a little easier.
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Does "breathe easier" mean China has gotten rid of coal? Because those are still going no matter who uses the electricity.
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I'm not so sure about that. Fiat currencies propped up by central bank monetary policies don't seem as sustainable moving into the latter part of the 21st century especially in the US where huge debt loads are already starting the old inflation tap dance. I'm old enough to remember 21% mortgage rates too, it wasn't pretty.
You could buy gold, silver, or BTC but the risks are all still there.
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And nothing of value was lost.
Rather, we can all breathe a little easier.
...and the air will be that little but cleaner, & the water that little bit less polluted*, etc., etc..
* Before you come at me with some "because hydroelectric" argument, yeah I know but they still need to fire up coal power stations to make up for shortfalls from crypto-mining consumption - Supply & demand on a large, networked scale.
The question in everybody's mind is (Score:4, Funny)
when will El Salvador declare war on China?
So is this (Score:2)
No to BTC or No to all crypto, wouldn't they just switch to a different crypto?
Re:So is this (Score:4, Interesting)
ROT-13 springs to mind. There was proof of work, then there was proof of stake, and I think it's high time we switched to proof of stupidity.
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Well then, everyone would get coins, so there has to be a better way than just stupidity to make a contest out of it.
Local solar (Score:2)
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You'd basically blanket half of the US in solar panels for that to even work. BTC power requirements are stupid.
Re: Local solar (Score:2)
finger hovering over left-click (Score:2)
bitcoin money laundering (Score:2)
Maybe all that bitcoin money laundering of stolen sovereign wealth from Chinese mega projects and then expatriated out to buy residential properties in coastal cities throughout the world might slow down. Go crash crash. Could be a bad time to buy a flat in Vancouver or Sydney right now.
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Meanwhile... (Score:5, Interesting)
El Salvador loses 17.65% of their official currency from last week.
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Nope, they lost 17.65% of the value referenced to something else. The amount of currency remains unchanged.
This distinction is important because we need to remind people bitcoin is not a currency. It is a secondary trading mechanism, nothing more.
If bitcoin were a currency then I could buy a burger for 0.0001BTC today, and if the exchange rate to the dollar halves I could still buy that burger for 0.0001BTC. But burgers aren't sold in bitcoin, they are sold in dollars.
Yeah, if they could put some GPUs on eBay... (Score:3)
That'd be great.
- Necron69
What'll be used to scare people next? (Score:1)
It won't be environmental since mining in North America is greener than China, not will it be "Communist-controlled crypto!" anymore.
Perhaps people will try out the "Crypto is only used by criminals!" angle again? I see that one has already popped up here.
Every time someone tries that last one out with BTC I just giggle in XMR.
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It won't be environmental since mining in North America is greener than China
So Musk is right? Because it sure as fuck aint green in North America.
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It won't be environmental since mining in North America is greener than China
Your "currency" experiment is effectively a 130 TWh worldwide room heater. I'm not sure if the fact that's powered with green energy would make a lot of difference.