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How China Took Control of Bitcoin (nytimes.com)

Posted by EditorDavid on from the people's-republic dept.

Slashdot reader Rick Zeman quotes the New York Times: In its early conception, Bitcoin was to exist beyond the control of any single government or country. It would be based everywhere and nowhere... Yet despite the talk of a borderless currency, a handful of Chinese companies have effectively assumed majority control of the Bitcoin network. They have done so through canny investments and vast farms of computer servers dispersed around the country...there are fears that China's government could decide, at some point, to pressure miners in the country to use their influence to alter the rules of the Bitcoin network. The government's intervention in 2013 suggests that Bitcoin is not too small to escape notice.

3 of 165 comments (clear)

  1. Not surprising by somenickname · · Score: 5, Insightful

    Bitcoin as an idea is very interesting but, in actual function, it's a scam. I wanted to learn more about it a year ago and so bought some mining ASICs. It doesn't take long before you realize that your magic money printing device was sold to you at a cost that means you will invariably lose money. Which makes sense. If I have a magic money printing device, why the hell would I sell it to you instead of running it myself?

    At the time when I bought my ASICs, the Chinese companies that were making them started changing directions and were moving towards a model of letting you rent ASICs that they would host. It's kind of a brilliant plan because it means they can reduce the costs of ASICs by creating WAY more than people will ever buy and then just renting people as many as they want. The rent more than pays for the electricity and manufacturing costs so, no matter what happens, the ASIC manufacturers always win. Unfortunately, they are the *only* people that win.

    It's not surprising at all that China controls the bitcoin market. They *are* the market. All the ASICs come from China and if they don't sell the ASICs, they make a profit by running them. If they do sell the ASICs, they make more profit by selling them at an inflated price that speculators will pay. It's a hell of a racket.

    1. Re:Not surprising by cfalcon · · Score: 5, Insightful

      I mean, this shouldn't be overly surprising. If it is a gold rush, the money is in making shovels. The same is mostly true even if it is a scam gold rush...

    2. Re:Not surprising by khallow · · Score: 5, Insightful

      It doesn't take long before you realize that your magic money printing device was sold to you at a cost that means you will invariably lose money. Which makes sense. If I have a magic money printing device, why the hell would I sell it to you instead of running it myself?

      No, what happened is that the cheap bitcoins went away. A cursory examination of the dynamics of the thing would have revealed that mining bit coins increases in computational/electricity cost over time. So as long as value of bit coins exceeds the electricity cost of mining them, then there will be massive computational resources thrown at them.

      There's no such thing as a free lunch.