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This is actually a remarkably good point. The key concept here is that Bitcoin mining -- even at a "Forex loss" -- will essentially trade electricity for Bitcoi
by johnloeber 12y ago
This is actually a remarkably good point. The key concept here is that Bitcoin mining -- even at a "Forex loss" -- will essentially trade electricity for Bitcoins, which can be used to purchase other currencies. Depending on what the miner values their local currency at, this can still make financial sense.
As an example: suppose you are a resident of country X, and you have 1000 XUnits that are valued at 1000 USD, but there are capital flight restrictions such that you can exchange your 1000 XUnits for only 300 USD. And suppose that you need to exchange your XUnits to USD, for whatever reason. You then use your XUnits to buy electricity and mining hardware, and generate Bitcoins, and sell them for 750 USD.
Note that you could try to do the same with e.g. steel, barrels of oil, or widgets, but with hardware you'd be subject to import/export taxes, and the entire operation would have much higher overhead costs (comparatively, setting up a mining farm is pretty cheap).
- narrator 12y agoIf you think about it, it's basically a tariff and tax free way to export electricity to any part of the globe.
- aptwebapps 12y agoI think that's taking the abstraction a step too far. ;)
- pbhjpbhj 12y agoAlso in some places you can probably [illegally] bypass the electric meter and leech someone else's electric supply - with bitcoin you can cash that electric in as money. Having seen images of the ratsnests of cables that festoon the pylons in some areas of China I can imagine it might be relatively easy to hookup a couple of jumpers and get some "free" bitcoins.
- unimportant 12y agoChina may be a developing country, but it's not a messy place where people steal electricity like in much poorer south east asian countries. Electricity is very reasonably priced (especially in rather rural areas where the factory is based) and there are tons of people with money in China that are always looking for potential high yield investments - sometimes with cash that cannot be invested in ventures that can be traced back to them due to it's dubious origins.
- pbhjpbhj 12y agoI was thinking this sort of thing,http://blogs.ft.com/photo-diary/files/2014/09/electric.jpg http://blogs.ft.com/photo-diary/files/2014/09/electric.jpg - but thinking about it China shouldn't have the issues with multiple utility companies hanging their wiring everywhere, perhaps I mis-remembered and it was another country. Here's one from Kathmandu, http://www.canstockphoto.com/tangled-electric-cables-5050998.html http://www.canstockphoto.com/tangled-electric-cables-5050998.... >not a messy place where people steal electricity // FWIW I wasn't suggesting that such a place be messy, the cause of this sort of cabling [dis]arrangement isn't related to hygiene; nor that Chinese are more prone to steal electricity just that complicated webs of cabling (as in that Kathmandu photo) could make it difficult to tell easily that someone had put in an extra line.
- astrodust 12y agoWhy not just buy Bitcoin directly? There's no requirement to mine these things in the first place if all you want to do is exchange them. Someone could fly in via Hong Kong with a piece of paper that could unlock $100MM of BTC and nobody would know. Meanwhile building a gigantic BTC mining facility will not go unnoticed.
- kszx 12y agoYou can do that with US Dollars. It's more complicated with Chinese Yuan.
- DrStalker 12y agoYou can only do that if you find a person with bitcoins that wants to exchange then for yuan located in China. Not an impossible scenario, but it might not be the most reliable.
- ukigumo 12y agoBecause the local currency would have to go trough the banking systems and if the seller's account is in any other country, then exchange restrictions are applied just the same.
- astrodust 12y agoThey have paper money, which you can exchange for BTC. Money exchangers have been doing this for centuries with different commodities to skirt around regulations, and BTC, gold, or jade figurines are all the same at the end of the day if there's an agreed value for them.
- ukigumo 12y agoWell, yes.. but the person giving you paper money in exchange for BTC will make their own exchange rate based on the capital risk incurred in transacting volatile goods, which is very different than transacting gold or jade figurines. Unless of course you meet a BTC collector who has no immediate plans on capitalizing on his investment.