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> evading China's exchange controls. I do see that use case (buy electricity in yuan, sell bitcoins for dollars), and I strongly suspect it's a thing that hap

> evading China's exchange controls. I do see that use case (buy electricity in yuan, sell bitcoins for dollars), and I strongly suspect it's a thing that happened, but I don't have any data on to what degree this was a thing that happened. Would you have any? Cheers :-)

Animats 11y ago
That was what caused the big Bitcoin run-up to $1000 in 2013. For a few months, people in China could buy Bitcoins using funds in yuan, transferred normally through the banking system in China. Then they could sell the Bitcoins for dollars outside China. Then the People's Bank of China (roughly equivalent to the US Fed and the US Treasury as a regulator) forbade that, and stopped all the Bitcoin exchanges in China from connecting to the banking system. For those of you who don't know, China has currency controls - it's difficult to convert yuan to dollars from within mainland China. There are ways around that, such as physically carrying yuan notes to Hong Kong, which is allowed up to some limit. But Chinese can't just do a wire transfer to a bank outside China. Going through Bitcoin, for a brief period, allowed such moves. After the PBC clamped down, it took a while for the Bitcoin community to get over its delusion that the PBC couldn't do that. Then Bitcoin crashed. Bitcoin mining in China may be an extension of that currency movement. From the standpoint of China's financial system, Bitcoin mining looks like an export manufacturing business. That's encouraged. It's OK to make stuff in China, sell it outside China, and keep the currency used to pay for it. Bitcoin mining is inherently limited; only US$800K a day is generated, which is far too little to affect China's exchange rate. So there's been no effort to crack down on that.
- davidgerard 11y ago
  > That was what caused the big Bitcoin run-up to $1000 in 2013. I thought that was the Willybot.

Animats 11y ago

That was what caused the big Bitcoin run-up to $1000 in 2013. For a few months, people in China could buy Bitcoins using funds in yuan, transferred normally through the banking system in China. Then they could sell the Bitcoins for dollars outside China. Then the People's Bank of China (roughly equivalent to the US Fed and the US Treasury as a regulator) forbade that, and stopped all the Bitcoin exchanges in China from connecting to the banking system. For those of you who don't know, China has currency controls - it's difficult to convert yuan to dollars from within mainland China. There are ways around that, such as physically carrying yuan notes to Hong Kong, which is allowed up to some limit. But Chinese can't just do a wire transfer to a bank outside China. Going through Bitcoin, for a brief period, allowed such moves. After the PBC clamped down, it took a while for the Bitcoin community to get over its delusion that the PBC couldn't do that. Then Bitcoin crashed. Bitcoin mining in China may be an extension of that currency movement. From the standpoint of China's financial system, Bitcoin mining looks like an export manufacturing business. That's encouraged. It's OK to make stuff in China, sell it outside China, and keep the currency used to pay for it. Bitcoin mining is inherently limited; only US$800K a day is generated, which is far too little to affect China's exchange rate. So there's been no effort to crack down on that.

davidgerard 11y ago
> That was what caused the big Bitcoin run-up to $1000 in 2013. I thought that was the Willybot.