Thread by @JiangZhuoer

Some thoughts about the impact of China's policy on #Bitcoin mining industry:
The current situation of #Bitcoin mining in China is not as serious as you think.

According to the minutes of "China Financial Stability Board": We resolutely prevent and control financial risk.... we shall crack down #Bitcoin mining and crypto trading activities in order to prevent individual risks from being spread to the social level.

From there, we can see that the main spirit of the meeting is to "prevent and control financial risks", to restrain social capital from flowing into #crypto mining sector which might lead to risks tranferring from individuals to the whole society.

In other words, individual mining is and has always been allowed as long as you're responsible for your own risks and profits, whilst the mining operated by financial capital might be forbiddend.

This minutes repeated the definition for #Bitcoin trading in 2013 "Notice on Preventing Bitcoin Risks Issued by the People's Bank and Five Other Ministries": Financial and payment institutions shall not participate in or provide service for #Bitcoin trading.

but that Notice also stated that "Bitcoin trade, as an online purchase and sale activity, the general public has the freedom to take part in at their own risk. "

For instance, In the Announcement on Preventing the Risks of Token Issuance and Financing on September 4, 2017, the ICOs were banned, but ICOs issued prior to that date were not punished as long as the issuers refunded investors at the fund raising price.

In September 2017, all China-based exchanges were required to be shut down, but users were given enough time to withdraw their tokens and none of their crypto assets were seized by the government.

Large datacenter and major veteran miners may suffer a significant loss this time, while the whole Bitcoin network will be as resilient as always.
The worst scenario would be: large datacenters are shut down and we go back to old days in 2014-15.

Small miners install several miners at home;
Medium miners set dozens of miners in a warehouse or a few hundred miners in a factory;
Veteran miners find a small remote hydroelectric power plant and locate there a couple thousand miners.

At the end of 2013, when I first entered the cryptocurrency industry, I bought two graphic card miners to mine at home, because at that time, one miner can generate a $500-$700 revenue per month. We were glad to earn this extra income.

Given that home-based miners need new machines, and they are not the target of this crackdown, in addition, most of the cutting-edge machines will be shipped overseas, the machines' price will remain in a reasonable price range.

Although home miners pay higher electricity costs, the whole industry becomes less efficient , the number of running machines will decline, making the output per unit rise and counterbalancing the impact of rising power costs.

In conclusion, #Bicoin mining will exist as normal, except the mining in China will be shifted from industrial-size datacenters to home miners, small or medium sized miners. The entire Bitcoin network will always be strong even its hashrate decline by 50%.

But in the long run, if China takes regulatory actions against crypto mining, then major Chinese manufactures #bitmain will probably sell most of their machines aborad:
Selling domestic = violation of regulation
Selling aboard = earn foreign currency

In the end, Chinese hashpower will flow abroad just like the Exchanges did in 2017, China will play a less significant role in the global hashpower distribution.

During the process, there will not be obvious changes in the entire Bitcoin network, except that European and North American mining pools will rank higher than the Chinese pools.