Bitcoin entrepreneur John Carvalho might be on to something. In a recent episode of the Tales from the Crypt podcast, he theorized why China shot itself in the foot by banning bitcoin mining earlier this year. At NewsBTC, we racked our brains trying to figure out possible reasons for the bizarre decision.
Are you making room for your CBDC? Is the CPC cutting the wings of the Chinese billionaires in any field? Have you already lost the battle for hash power? Does China have energy problems? Is that an ESG problem? Did they close the exit ramps before Evergrande collapsed? Is Bitcoin Just Too Dangerous? Why should they pull out of a billion dollar business that they controlled? Why? WHY?
It’s been a long time since I last came to TFTC to chat.
I had a great time discussing various bitcoin and good morning tweet topics.
– John Carvalho (@BitcoinErrorLog) November 2, 2021
The interviewee sums up our position with one sentence: “I refuse to believe that China is stupid.” According to Carvalho, they have made too much money in the mining business alone and also control the ASIC manufacturers. Not only that, mining machines add value to chips. And they control this business too, along with Taiwan and South Korea. Why should they shoot the goose that laid the golden eggs? It just doesn’t make sense … unless …
Carvalho’s Mind Blowin Theory
Warning: The following text is full of speculations and assumptions. “I can easily be wrong,” was one of the first things Carvalho said. He has no evidence that this is happening, and neither does NewsBTC. Let’s take it as a thought exercise. However, this is how Carvalho would “play the game”. And if he could come up with that plan, so did the CCP leaders.
According to Carvalho, China manipulates the Bitcoin price every cycle to get more BTC. They sell, use the collateral to short bitcoin, and accumulate again when the bear market hits. This time, however, China faced a more mature and demanding market. Your FUD techniques weren’t working. People didn’t fall for their tricks. So they had to turn it up a few notches.
The most important ASIC manufacturer, the Chinese company Bitmain, had a new generation of miners ready. The KPC “decided to create a demand for the retrofit kit and combine it with the FUD”. As usual, they sold their bitcoins and made their shorts. Then China banned Bitcoin mining and the whole country turned off ASICs. The world perceived the ban as real, just “look at the hashrate”. This is the first time this has happened. Then China sold a small portion of its ASICs to the US.
According to the latest statistics, the US now provides the largest percentage of Bitcoin’s hashrate … or does it? “Everyone has this story in which China stupidly left the mining industry and left it to the US,” said Carvalho, unconvinced. A few months after the ban on China, American mining companies are suddenly on everyone’s lips. But is that really something going on?
If the theory holds, China will return to the mining game
This is price manipulation to a different extent. China has found a way to get more Bitcoin against both traders and buyers of ASICs in other countries. You got rid of the old equipment and Bitmain will be rolling out new machines soon enough. Then China will buy back its Bitcoin and turn on its next-generation ASICs. According to Carvalho, they may have already done it, and they just don’t sign pads or sign their pads differently. If so, soon enough they will end Bitcoin mining and develop a narrative about the “resurgence of Asian mining.”
The host of Tales From The Crypt, Marty Bent, is not convinced. He argues that we need to separate the CCP from individual Chinese miners. It’s worth noting that Bitcoin mining is Bent’s specialty. He is a miner himself and has stakes in several large Bitcoin mining companies.
According to Bent, there were definitely mining farms that operated in mainland China and moved to the United States. And considerable surgeries at that. He thinks the Chinese may not have moved all of the hash rate to the US, but they definitely moved “a material amount”. He also believes there is definitely hashrate left in China even after the ban.
According to Carvalho, there is anecdotal evidence to contradict the theory, but it is only anecdotal. “We don’t have enough information about China,” he says. Bent agrees, adding that due to the permissionless nature of the Bitcoin network, we can never really know what is happening. “However, foreign buyers get access to new gene miners”. At least with pre-orders. Take what it’s worth
BTC price chart for 11/08/2021 on Bittrex | Source: BTC/USD on TradingView.com
Conclusion and other China theories
According to Carvalho, web traffic measurement tools could be used to check that traffic to the Chinese mining pools is roughly the same as it was before the ban. The signing of blocks can be manipulated. “The only reason we know who is mining what is because they say they mining it,” he says. What does that mean? Are the Chinese already mining? Is there an increase in unsigned blocks? Or are they just signing them as non-Chinese entities? You could have planned this a long time ago and put the pieces in place.
The TFTC host proposes an alternative theory. This is based on his conversation with Edwar Evenson from Braiins, who lived in China. According to Evenson, this year marked the CCP’s 100th anniversary, and the theme of the celebration is “Harmony.” And unfortunately, they consider Bitcoin mining to be inharmonious. That’s why they banned it. Once the anniversary is over, they will silently allow it.
Perhaps, but according to Carvalho, the Chinese people’s silent return to mining would be exactly what would happen if either theories were true. He admits that in order to validate his theory, serious research must be done, which he cannot do. So he leaves it open to the public to get involved and do it. NewsBTC did its part to get this article published. Now it’s your turn.
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