China takes aim at its mining industry, Warren Buffet takes (no) position and the environment — Daily Crypto Links 1/10/18
Reading todays Wall Street Journal article about the Chinese Government’s alleged crackdown on mining operations, I was reminded of an early official/unofficial Uncrypt.io meeting at a great Mexican restaurant in the SoHo neighborhood of NYC (foodie side-blog perhaps?) about possible catalysts for massive damage to Bitcoin prices.
We agreed then that a top contender could be a change in the mining infrastructure of the Bitcoin network, and a hypothetical scenario in which China cracks down not on citizens holding Bitcoin, but rather on Chinese citizens mining BTC in Chinese territory. The WSJ article cites that China accounts for just under 80% of global Bitcoin mining.
In terms of recent crypto history as it relates to regulation, it’s important to confirm specific details of what regulation is being enacted, as in what specific laws or statutes are being added or changed (news), and avoid general blanket statements like crackdown or ban (rumor). We reviewed this lesson recently in the mania around South Korea, as many initially panicked about a “ban,” before reading the fine print of what was really being enacted.
The WSJ article quotes statements from local authorities about guiding the shutdown of mining operations, and calling for an “orderly exit” as well as examples of mining operators intending to comply. As mentioned above, this has us concerned about a major impact to the BTC market. However, at this stage, in reminiscing about that dinner I remain more moved by the mole in my street enchilada that night than declaring our conversation prophetic. What exactly is the regulation being enacted? If China declares that mining is illegal in their territory, does that mean the major mining operators can move their servers to other countries, or is income from mining now illicit? How would enforcement work? Can other cryptocurrencies be mined? Can ASICs be used for other purposes?
Here’s my hot take: I’m not overreacting until I see a direct quote from the PRoC government to the effect of it being illegal to consume energy resources within the borders of the country to power ASIC mining devices participating in the Bitcoin network.
The full WSJ article can be read here
In probably the most levelheaded explanation I’ve come across for being a “no-coiner,” Buffet states “I get into enough trouble with things I think I know something about…Why in the world should I take a long or short position on something I don’t know anything about.”
Cut to Socrates and the Oracle at Delphi giving a knowing nod.
Finally, an article that you should probably save somewhere for constant review:
