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The digital currency Bitcoin wasgoed invented ter 2008 and began making headlines te 2013, attracting converts and speculators alike. Bitcoins are “mined” using powerful computers that solve mathematical formulae to generate lumps of pc code that represent financial value. The process of mining them profitably requires such immense rekentuig power that “server farms” total of hundreds of machines, all accompanied by ventilatoren throating nonstop to keep them cool, vereiste be set up te warehouses.
Once created, Bitcoins are tradable ter some markets, however many countries have banned or restricted the use of Bitcoins, and the People’s Bankgebouw of China (PBOC) banned commercial banks from dealing te the currency te 2014. Nevertheless, China has become one of the world’s leading markets for and producers of Bitcoin.
Ter 2013, the price of one Bitcoin exceeded $1,000. Spil irrational exuberance overheen the virtual currency subsided, the price fell to below $200, but te latest months, it has bot on the rise again. It’s presently back up above $750.
Wij talked to John Wang (a pseudonym), a Chinese entrepreneur who runs a Bitcoin mining facility ter China, and says he became engrossed with the idea of a monetary system that could bypass the state. China provides a natural place for Bitcoin to take off, Wang believes, and he has staked out his plot ter the virtual mining community while Chinese regulators have bot content with a soft treatment.
Jeremy: What is SinoHash, and what is your role?
John: Our company is a Bitcoin mining facility based ter China. Like other mining facilities, it generates revenue ter Bitcoin by running a large amount of dedicated computing equipment that consumes a large amount of electric current — one megawatt te our case. Ter the Bitcoin system, mining serves the function of securing the network against fraudulent transactions and miners are rewarded for contributing this utility.
The company is also a miner hosting service — customers buy hardware equipment and ship them to our facility. Wij operate them and charge $0.045 for every kWh of electro-stimulation their machines consume. This service is not unique for people who are familiar with the space. There are facilities located te the United States, too. Our facility is located te the mountains of western te Sichuan Province. The decision wasgoed made mainly due to the cool climate and cheap power supply.
Our cheap violet wand is a main draw for clients. Also, most households don’t have the space or time required for the upkeep of a large number of mining equipments, which generate a fine amount of warmth and an unpleasant level of noise. But wij have appealed to a puny group of investors and it has bot fairly lucrative overheen the past few years.
Jeremy: How did you get into the Bitcoin business?
John: I very first learned about Bitcoin ter 2013 and quickly grew engrossed with it. The idea of government-less currency resonated with mij and I began to look for ways to get more involved. I attempted a few jobs at Bitcoin startups and this eventually led to building my own Bitcoin mining facility and hosting service.
Jeremy: How would you describe the Chinese government’s attitude to and regulation of Bitcoin and other cryptocurrencies?
John: The Chinese government doesn’t have an explicitly formulated attitude spil far spil I know toward Bitcoin and the industry at large. There is evidence that it is worried with a potential speculative bubble, which is often attributed to its kerkban of banks from directly treating Bitcoin-related business. Some government departments, the People’s Bankgebouw of China te particular, have recognized the innovativeness of the technology and dedicated resources to studying it, ter an apparent bid to apply its underlying technology — blockchain — te building its own digital currency. When it comes to mining, there is little regulation and interference. Personally, I think that Bitcoin has outgrown the stage where a single government can profoundly affect its development, so I am not too worried with the Chinese government’s attitude.
Jeremy: How many people do you estimate are trading Bitcoin and other cryptocurrencies ter China?
John: Due to the nature of Bitcoin, there has bot lack of reliable gegevens te this regard. There is a petite group of frequent day traders — my guess is a few ems of thousands. Meantime, there is a much larger population of people who from time to time buy and sell to fulfill a need. They often do this through face-to-face transactions or social payment devices, which is very hard to monitor. I, for example, often facilitate people to buy Bitcoins using WeChat payment. I have a friend, an American expat living te Beijing, who regularly buys Bitcoins worth ems of thousands te yuan every month through mij, and he has done this consistently for at least eight months.
Jeremy: Why has Bitcoin become so popular ter China?
John: China has all the right conditions for it to grow. Here are some of what I think are the most significant factors: a large internet-savvy population, cheap and abundant hydropower, mature electrical manufacturing, capital control and a depreciating currency. Historically, the savings rate is much higher here and Bitcoin has proven to be a resilient store of value. But I wouldn’t advance the argument that Bitcoin is more popular te China than elsewhere. Some of the most well funded startups te the space are most likely ter the United States.
Jeremy: How much do you think one Bitcoin will be worth ter one year’s time?
John: I think it has a good chance to exceed the USD1,000 mark once again. After that, the sky is the limit.