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"If I hold bitcoin, I'd do some very serious looking into what happens if most of china's exchanges and miners suddenly are brought off line for a couple of wee

"If I hold bitcoin, I'd do some very serious looking into what happens if most of china's exchanges and miners suddenly are brought off line for a couple of weeks." As much as I don't like bitcoin, there is one bit of robustness built-in. If China were to shut down all of the exchanges and farms, the balance of hashing power for the bitcoin network would essentially leave China and be split between the remaining connected exchanges. This would hurt yuan/bitcoin rates, but would probably stabilize rates for the rest of the world economies attempting to utilize it.

fosco 10y ago
Thanks for this explanation. What are you thoughts if China had the goal of making the Yuan/bitcoin rate worth less to increase exports...this sounds like it could be one of many actions they could decide to take. I find this incredibly interesting.
- lightedman 10y ago
  Historically speaking, that's shooting themselves in the foot. They'll drain their own resources, which is truly our ultimate plan (and why a majority of our resources are currently locked up - our national security depends upon exploiting resources outside of our homeland to maximum efficiency.)
adamu__ 10y ago
If China were to shut down bitcoing mining, my understanding is that the worst case scenario is much more dire. The network only adjusts the 'difficulty' relative to current network hash power every 2,016 blocks. Depending on the severity of the overall hash power reduction, new block discovery might slow down significantly. This would also delay a recalculation of the new difficulty accommodating the reduction in hash power. The network could be severely throttled for weeks.
- lightedman 10y ago
  "the worst case scenario" "The network could be severely throttled for weeks" That's exactly what would stabilize it instead of it having the wild multi-hundred dollar swing it's experienced essentially since inception. It's the wild hashing power China currently holds right now that's giving it the dominant influence over the currency. Reduce the dominance, spread the risk, stabilize the currency. This is like a basic lesson that was taught in the TV series "Reboot" with Dot Matrix vs Captain Capacitor - Diversification.
- josu 10y ago
  How can you actually shut down mining? Maybe they'd make it harder for miners to convert bitcoins to fiat, but that wouldn't stop the mining.
  - Analemma_ 10y ago
    I doubt they actually care about the mining, but they certainly could shut it down if they wanted to. I mean, it's China. It's not exactly difficult to locate the miners either - look for the building using 400 MW that doesn't have any steel or widgets coming out. But I think the parent's point was that, if the Chinese exchanges were shut down, that could have a big impact on price if the hypothesis is true that most bitcoin activity is evading Chinese capital controls. If the hit was big enough it might push mining into unprofitability. This is all speculation, but not impossible.
    - altoz 10y ago
      First, yes, there are large farms of miners, but that's only some of the mining power. While these mining farms can be targeted and shut down, a significant amount of mining power is actually held in places that wouldn't be easy to locate. Those miners are going to keep mining as the owners have a strong economic incentive to do so, even if their mining pool in China gets shut down. They could, for example, just connect to a pool outside of China. Also, what would happen to all the mining equipment should a mining farm get shut down? If the shut down is permanent, you can bet the people that own those machines would try to sell those miners as quickly as possible to people outside the country that can run them. The economic incentives of bitcoin are such that there will be significant resistance to any government attempts at shutting down.
    - petertodd 10y ago
      FWIW, the largest Bitcoin mine in the world is more like 10MW, and most are significantly smaller than that. I do agree though that shutting down the larger Chinese mines wouldn't be too difficult if the government had the will to do it.
  - dragonwriter 10y ago
nonbel 10y ago
>"I don't like bitcoin...hashing power for the bitcoin network would essentially leave China and be split between the remaining connected exchanges" Exchanges aren't necessarily the miners. Your first phrase suggests you may not know much about bitcoin, but maybe you have info I am missing. Are all the big exchanges also miners now?
- dmoy 10y ago
  Majority of mining power is in China. If the govt is really cracking down enough to take their exchanges offline, an ancillary effect could be that Chinese miners would get skittish and stop. (Or not, they could well just keep operating in the hopes that the government won't go after them). Hard to say.
  - brilliantcode 10y ago
    Won't guys like this https://www.youtube.com/watch?v=K8kua5B5K3I https://www.youtube.com/watch?v=K8kua5B5K3I get affected? If all they can do is mine but not cash out, what happens to the network transaction speed and the overall difficulty?
    - h1d 10y ago
      How is cashing out got anything to do with processing speed?

fosco 10y ago

Thanks for this explanation. What are you thoughts if China had the goal of making the Yuan/bitcoin rate worth less to increase exports...this sounds like it could be one of many actions they could decide to take. I find this incredibly interesting.

lightedman 10y ago
Historically speaking, that's shooting themselves in the foot. They'll drain their own resources, which is truly our ultimate plan (and why a majority of our resources are currently locked up - our national security depends upon exploiting resources outside of our homeland to maximum efficiency.)

adamu__ 10y ago

If China were to shut down bitcoing mining, my understanding is that the worst case scenario is much more dire. The network only adjusts the 'difficulty' relative to current network hash power every 2,016 blocks. Depending on the severity of the overall hash power reduction, new block discovery might slow down significantly. This would also delay a recalculation of the new difficulty accommodating the reduction in hash power. The network could be severely throttled for weeks.

lightedman 10y ago
"the worst case scenario" "The network could be severely throttled for weeks" That's exactly what would stabilize it instead of it having the wild multi-hundred dollar swing it's experienced essentially since inception. It's the wild hashing power China currently holds right now that's giving it the dominant influence over the currency. Reduce the dominance, spread the risk, stabilize the currency. This is like a basic lesson that was taught in the TV series "Reboot" with Dot Matrix vs Captain Capacitor - Diversification.
josu 10y ago
How can you actually shut down mining? Maybe they'd make it harder for miners to convert bitcoins to fiat, but that wouldn't stop the mining.
- Analemma_ 10y ago
  I doubt they actually care about the mining, but they certainly could shut it down if they wanted to. I mean, it's China. It's not exactly difficult to locate the miners either - look for the building using 400 MW that doesn't have any steel or widgets coming out. But I think the parent's point was that, if the Chinese exchanges were shut down, that could have a big impact on price if the hypothesis is true that most bitcoin activity is evading Chinese capital controls. If the hit was big enough it might push mining into unprofitability. This is all speculation, but not impossible.
  - altoz 10y ago
    First, yes, there are large farms of miners, but that's only some of the mining power. While these mining farms can be targeted and shut down, a significant amount of mining power is actually held in places that wouldn't be easy to locate. Those miners are going to keep mining as the owners have a strong economic incentive to do so, even if their mining pool in China gets shut down. They could, for example, just connect to a pool outside of China. Also, what would happen to all the mining equipment should a mining farm get shut down? If the shut down is permanent, you can bet the people that own those machines would try to sell those miners as quickly as possible to people outside the country that can run them. The economic incentives of bitcoin are such that there will be significant resistance to any government attempts at shutting down.
  - petertodd 10y ago
    FWIW, the largest Bitcoin mine in the world is more like 10MW, and most are significantly smaller than that. I do agree though that shutting down the larger Chinese mines wouldn't be too difficult if the government had the will to do it.
- dragonwriter 10y ago

nonbel 10y ago

>"I don't like bitcoin...hashing power for the bitcoin network would essentially leave China and be split between the remaining connected exchanges" Exchanges aren't necessarily the miners. Your first phrase suggests you may not know much about bitcoin, but maybe you have info I am missing. Are all the big exchanges also miners now?

dmoy 10y ago
Majority of mining power is in China. If the govt is really cracking down enough to take their exchanges offline, an ancillary effect could be that Chinese miners would get skittish and stop. (Or not, they could well just keep operating in the hopes that the government won't go after them). Hard to say.
- brilliantcode 10y ago
  Won't guys like this https://www.youtube.com/watch?v=K8kua5B5K3I https://www.youtube.com/watch?v=K8kua5B5K3I get affected? If all they can do is mine but not cash out, what happens to the network transaction speed and the overall difficulty?
  - h1d 10y ago
    How is cashing out got anything to do with processing speed?