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Author Topic: [2017-09-20] China’s bitcoin miners in limbo after Beijing shuts down exchanges  (Read 5208 times)
Kanapka
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September 21, 2017, 03:22:49 AM
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In a remote corner of northwest China, Wang Hongyi plans to set up a bitcoin “mining farm” with 1,000 computer servers, hoping to take advantage of low electricity and operating costs to cash in on the boom.

He’s one of many Chinese investors seeking to profit from the popularity of the digital currency, which was worth less than US$600 a year ago and peaked at US$4,950 on the first day of this month.

Nearly 70 per cent of all new bitcoin are mined in China – miners use computer hardware to find bitcoin by creating new links in its blockchain, which is essentially a huge digital ledger.

Wang’s planned farm in Gansu – one of the poorest provinces in China – will cost about 10 million yuan (US$1.52 million) to set up.

Initially he was confident he could turn a profit because the site is located right next to a hydropower station and that will cut electricity fees – a key operating cost – to about 0.25 yuan per kWh.

He estimates he will need five staff to manage the warehouse of computers running around the clock.

But after the Chinese government last week began an all-out war on bitcoin and other digital currencies, Wang, who is in his early 30s, is having second thoughts about opening his mining farm.

Fundraising through initial coin offerings has been banned and all digital currency exchanges in China will be shut down. Some in the industry fear Beijing might go further and target mining.

“If we start this business and the government says it’s illegal, then it will be impossible for us to recover our investment,” Wang, who was in Hong Kong for a cryptocurrency conference on Wednesday, told the South China Morning Post.

Bitcoin trading platforms rush to contain damage

While the Chinese government has told cryptocurrency exchanges to stop trading bitcoin, it has not explicitly banned possession and production of the digital currency – offering hope to miners that they can continue to dig out bitcoin and sell them on overseas platforms.

Electricity is the main cost for bitcoin miners – it costs about 10,000 yuan to mine one bitcoin in China,

according to Leon Liu, chief executive of BitKan, which organised the Hong Kong conference.

Bitcoin is currently valued at about US$3,900. But if it goes back up to more than US$4,000 it would take about four months for Wang to recover his set-up costs – making it a lucrative investment.

full: http://www.scmp.com/news/china/economy/article/2112085/chinas-bitcoin-miners-limbo-after-beijing-shuts-down-exchanges

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September 21, 2017, 10:06:19 AM
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Oh well, he will definitely the very first casualty of war and obviously not the last one because of the Chinese government crack down on bitcoin and later on bitcoin mining. This guy has invested a lot but was caught off guard just like the rest of the Chinese crypto loving citizens. He's in shock but I guess he can't do a thing but to wait a official announcement from the government if they really are going to totally shutdown China from bitcoin. Recovery of investment is already out of the question here, nowhere would he recover, the next question where do they go from here?

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Falgorn
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September 22, 2017, 01:47:36 AM
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I believe that after prohibitions on circulation of crypto currency in your country, the Chinese government will look for ways to manage the crypto currency and one of them is the creation of its own crypto currency, which it will fully comply with. Perhaps, for its creation, the bitcoin mining capacities will be attracted and the miners of China will be able to find work for themselves.
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September 22, 2017, 10:19:50 AM
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a miner has contract workers and pays taxes, I do not see why the Chinese government would ban mining companies

Chinese authorities can monitor miners' actions

He's in shock but I guess he can't do a thing but to wait a official announcement from the government if they really are going to totally shutdown China from bitcoin.

I have not yet seen the Chinese authorities against the miners


[...]

the Chinese authorities probably want to have control of everything, the ICO and exchange were outside the control of the Chinese authorities, they should be trying to create something to monitor the ICO and exchange, just have patience that in the future the exchange and icos will return to be accepted

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