Bitcoin Forum

Has anyone considered what might happen if a government with money and technology were to build their own large scale mining farms?
They could secretly mine tons of bitcoins and sell them on the market and manipulate the value. Or they can render the entire bitcoin network inoperable due to various attacks or manipulations.

There are lots of government that can do this, and maybe some of them are already.

You can't secretly mine Bitcoins. What did you learn...

Big owners are called Whales. They're kind of common. No issue, as most of them are hodling.

We'll see the size of a specific pool grow to bad levels, and people will DDoS it or fork the blockchain (If it's necessary) and kick them off the network. And you can't really manipulate the blockchain unless you have more than 50.5% of the network, in which see my previous point.

I doubt governments can or are doing this secretly. An order for 1,000,000 S3 miners would raise eyebrows. Lots of eyebrows.

google "cost of 51 percent bitcoin attack"

Long term market is hard to manipulate. If it is that easy to manipulate price, US won't be in this much mess.

I know the government was going to buy miners to obtain bitcoin for their undercover work, but I think they decided just to buy it instead (bitcoin)... So, i dont believe that the government is too big of holders except for the coins they took from dpr and SR,

They could do that, sure. If the government really wanted to do that, I'd bet they have more than the money required to buy that much hashrate. They could also pay Intel or some big company to create custom designed ASICs for them.
I really wonder whether they see bitcoin as such a threat, why don't the banks just shut Bitcoin down them?

Actually I think guvernments of the future (maybe present) will mine BTC. But not to destroy it, but to not miss out if this takes off. They have think tanks that report to them and if Bitcoin gets too much momentum, they surely won't just stand by and do nothing!

I'm sure they have enough capital to buy all the coins out there but that would only work for people willing to sell their coins and even then it would only push the price of currently circulated coins up.

They could just not sell the coins they confiscate. They could just keep them and use them as some sort of reserve. It may come in handy at some point. Wikileaks didn't spend their donations as well, and suddenly they were worth a freaking lot - it saved them!

By secretly mining, I mean they can create a false front, say a company called "Bit-tech X" and funnel all its earnings through other channels.
And if a gov't were to do this, they wouldn't buy mining rigs from an existing manufacturer. They'd probably build their own using military engineers and such.

If a new whale all of a sudden appears one day, taking 20% of the networks hashing power (such as one of those "unknown" miners), what would it mean?

Obviously they wouldn't want the whole world to know that they actively keep those BTC. If one nation starts to notice that other nations stockpile BTC, a big run on BTC would happen. Everyone would want to be the first.

Like the nations stockpiled gold when there was a run for it.

So you are suggesting that a government would spend more than a billion dollars to create 2-3 fraudulent transactions on the Bitcoin Network?

https://www.youtube.com/watch?v=bTPQKyAq-DM&feature=youtu.be&t=48m56s

http://www.coinometrics.com/bitcoin/brix

Bitcoin have the potential to become gold, which is reserved by most countries to back up their currency. There is an possibility some countries mine Bitcoin and stock it to back up their currency.

Name one country thack backs up its currency with gold?

This is terrifying.

I'm selling all my coins right now.

Way ahead of you. I bet you noticed the downpressure the last days. Yep, thats me.

All miners are welcomed to secure Bitcoin with additional hashpower, government too  :)

https://www.youtube.com/watch?v=bi2thGzzNSs

yes, that is the beauty of the design. By being selfish (the government) they help secure the network more. Perfect incentivication!

I guess you would start collecting as much as you are interested in having and then publicly announce it or make it obvious that you started stockpiling it for some time now. That way you ensure that the price skyrockets, making your investment more worth and it becomes more stable.

Yes and in addition to that you don't even announce that you already own the stockpile, you just say that you are going to acquire it. This way you have a doubled effect: People get more confidence in the currency + expect a sharp rise due to influx of your governments money. This will lead to a leveraged bitcoinprice that will attrakt private and institutional investors.

That is how I'd do it.