[2017-09-18]Will Bitcoin Mining Farm in China be Closed?

[hl5460]

Pictures of “Technical Preplan on Blocking Bitcoin overseas Transaction” were circulated in Wechat group and later posted on weibo around 18pm 16 September. The document describes the preplan of blocking bitcoin exchanges and Bitcoin blockchain data-syncing, along with a list of overseas exchanges.  The news caused panic sell, a daily low of 16,661 was observed on OKCoin around that time. Chinese Bitcoin community is vulnerable after the “exchange ban”. Could things get worse like shutting down mining pool in China?
Although the screenshots or pictures cannot be verified without a reliable source, a report on Sina  confirmed the authenticity, citing support from “insiders”.



Technical Preplan for blocking Bitcoin overseas transaction

The technical measures that should be deployed by 30 September include:

1. Block accesses to overseas exchanges such as Coinbase, bitfinex, localbitcoins on main egress router, including web access, app access, and API access interfaces.

2. Block access to the Bitcoin seeding nodes on the primary exit router,

3. Through DPI recognition, discard Bitcoin blockchain synching data on main firewall.
The Bitcoin exchanges mentioned in the document include: Coinbase, Okex, Okcoin, Bithumb, Bittrex, coinone, bitflyer, bitstamp, bitstar, bitfinex, Poloniex, kraken, bitmex, localbitcoins.

Meanwhile, to prevent nodes from synching data through VPN, mining pools in China (Appendix 4) will be closely monitored and

“Contact local communication administration authority to cut off internet access of mining pool if necessary. “
The “Appendix 4” is missing but the strong-arm of authority is not to be doubted. In the past,

According to a document released by XJEIC (the Economic and Information Commission of Xinjiang Uyghur Autonomous Region) on 19th July, the authority asked subsidiaries to “take caution on supporting Bitcoin mining enterprises”. The 2-page document points out that Bitcoin mining is not cloud computing center. Mining farm has no economic contributions locally other than “consumption of lots of power”.


“Take caution on supporting Bitcoin mining enterprises”released by XJEIC

The document also suggests that the renting fee of such mining farm should be collected once a month and other premium policy like taxation cut are not applicable for such business.

“Local government or enterprises is suggested not to get involved
According to forum post  on 8btc, Bitmain planned to build huge data center in Xinjiang. But the plan was delayed by bad weather, according to chatlog by Jiang Zhuo’er.
The news may be FUD, but Haipo Yang, CEO of Viabtc, expressed his concern:

Technically, China can’t ban bitcoin traffic, we have our own sync network. But if China gov say mining is illegal, we are fucked.
Mining pools business is not considered illegal at the moment, and BTCChina reiterates that the BTCC mining pool service continue after the trading closure on 30 September. We have observed a turn of regulatory attitude towards Bitcoin and other cryptocurrencies. As 5 out of top 6 bitcoin mining pools are situated in China, it would be a disaster if internet connection of these mining pools were taken offline.

Bitcoin network saw a 19.58% difficulty increase at blockheight 485,856 yesterday.


http://news.8btc.com/will-bitcoin-mining-farm-in-china-be-closed

[Carlton Banks]

China could succeed in helping less competitive Bitcoin mining regions get further back into the marketplace, removing the dominant influence of China based pools and mines. And it would be a win against the "anthropogenic climate change" hand waving too (China's electricity being in no small part produced in coal powered stations).

But the stated aim (eliminating capital flight from the Chinese economy) won't work without crippling the Chinese state into something as authoritarian as North Korea. The Chinese people, and in particular it's traveling, educated middle-class, are unlikely to be happy with the changes needed to eliminate capital flight effectively (further restrictions to travel and access to information would definitely be 2 important aspects of a successful elimination of capital flight). And even then, smart and/or educated Chinese people will skirt the ban, and Bitcoin will continue to be one of the successful methods.

Maybe the PRC could limit capital flight to only the most powerful and/or corrupt individuals, but that's a recipe for disaster also, really. Authoritarians in powerful states often die strangling themselves and those closest to them before they succeed in killing the whole country and it's people.

[moriskarlov]

Not less important how possible Chinese mining farm ban could affect BTC price. Besides huge farms are very significant factor for chip manufacturers to constantly increasing computing power.

[Marry Finch]

Judging by what draconian measures China officials take with respect to the cryptoplite, which should lead to the complete blocking of transactions in the country, it is possible that China will prohibit mountain farms for the production of bitcoins. However, for bitcoin, this will not be a serious blow, because the Japanese are ready to start the production of bitcoin and continue what was previously done in China.

[hl5460]

Judging by what draconian measures China officials take with respect to the cryptoplite, which should lead to the complete blocking of transactions in the country, it is possible that China will prohibit mountain farms for the production of bitcoins. However, for bitcoin, this will not be a serious blow, because the Japanese are ready to start the production of bitcoin and continue what was previously done in China.

When could Japanese set up the mining farm?
China could block bitcoin data syncing 11 days later.

[hl5460]

China could succeed in helping less competitive Bitcoin mining regions get further back into the marketplace, removing the dominant influence of China based pools and mines. And it would be a win against the "anthropogenic climate change" hand waving too (China's electricity being in no small part produced in coal powered stations).

But the stated aim (eliminating capital flight from the Chinese economy) won't work without crippling the Chinese state into something as authoritarian as North Korea. The Chinese people, and in particular it's traveling, educated middle-class, are unlikely to be happy with the changes needed to eliminate capital flight effectively (further restrictions to travel and access to information would definitely be 2 important aspects of a successful elimination of capital flight). And even then, smart and/or educated Chinese people will skirt the ban, and Bitcoin will continue to be one of the successful methods.

Maybe the PRC could limit capital flight to only the most powerful and/or corrupt individuals, but that's a recipe for disaster also, really. Authoritarians in powerful states often die strangling themselves and those closest to them before they succeed in killing the whole country and it's people.

GFW is very a powerful tool.

[Falgorn]

Given the intentions of the Chinese government to prohibit its citizens from accessing any foreign exchange bureaus of crypto currency, it is entirely possible that all the farms for mining bitcoin in China will be closed. After such a last information, nothing is surprising.

[Tesorex]

Oh boy they're at it again, of course after seeing they just doubled the total supply of Bitcoin overnight while the government is working their asses off to justify paper money printing %5 every month, they saw $5B came out of the thin air and suddenly billions were flying out of the country, you expect them to sit and watch? I'm getting ready to fill their shoes when the battle begins and difficulty decreases.

[aso118]

Given the intentions of the Chinese government to prohibit its citizens from accessing any foreign exchange bureaus of crypto currency, it is entirely possible that all the farms for mining bitcoin in China will be closed. After such a last information, nothing is surprising.

But closing these farms wouldn't prevent capital flight, Right? The current shutting down of Bitcoin exchanges is way more effective nd it could prevent a lot of common people from accessing Bitcoin. Blocking blockchain sync data and banning mining are extreme steps

[hl5460]

Given the intentions of the Chinese government to prohibit its citizens from accessing any foreign exchange bureaus of crypto currency, it is entirely possible that all the farms for mining bitcoin in China will be closed. After such a last information, nothing is surprising.

Problem is that will other countries follow suit?

[hl5460]

Oh boy they're at it again, of course after seeing they just doubled the total supply of Bitcoin overnight while the government is working their asses off to justify paper money printing %5 every month, they saw $5B came out of the thin air and suddenly billions were flying out of the country, you expect them to sit and watch? I'm getting ready to fill their shoes when the battle begins and difficulty decreases.

You need a miner to substitute the difficulty drop, if there is any.

[iamTom123]

China could succeed in helping less competitive Bitcoin mining regions get further back into the marketplace, removing the dominant influence of China based pools and mines. And it would be a win against the "anthropogenic climate change" hand waving too (China's electricity being in no small part produced in coal powered stations).

But the stated aim (eliminating capital flight from the Chinese economy) won't work without crippling the Chinese state into something as authoritarian as North Korea. The Chinese people, and in particular it's traveling, educated middle-class, are unlikely to be happy with the changes needed to eliminate capital flight effectively (further restrictions to travel and access to information would definitely be 2 important aspects of a successful elimination of capital flight). And even then, smart and/or educated Chinese people will skirt the ban, and Bitcoin will continue to be one of the successful methods.

Maybe the PRC could limit capital flight to only the most powerful and/or corrupt individuals, but that's a recipe for disaster also, really. Authoritarians in powerful states often die strangling themselves and those closest to them before they succeed in killing the whole country and it's people.

I am sure that soon there would be a digital uprising due to the controls imposed by their government right now...this can be too much especially for the newly emerging middle class section of the country. When you have the money and you lack the freedom to do something with it, there can be some resistance and the government have to careful to thread along this line. It may not be happening right now away and it can take many years but definitely changes would be brewing in China. There can be new and younger leaders who might not be too comfortable with the way the country is being governed right now and if there would be some economic problems they can be the catalysts needed for some reforms. China remains to be that bully boy in Asia no matter how good is their diplomatic handshakes are.