Topic: 🔥 If China confiscates miners - is Bitcoin still safe? [Threat Model Analysis] (Read 288 times)
January 14, 2021, 09:14:51 AM
I'm more interested in what happens to the price in this case.
January 11, 2021, 04:15:42 PM
Yes. Let's imagine they tried to make Bitmain, which is based in a China, a state-owned company. Now Bitmain has control of two of the largest mining pools Antpool and BTC.com. They're also the world's biggest supplier of miners. But they are incorporated in Singapore, unlike Alibaba and other conglomerates which are incorporated in China. That means Bitmain is subject to Singapore's business laws not China's. China can only govern business practices that Bitmain does inside China (i.e. sale of their miners to China residents), and fine Bitmain if they break any Chinese laws while doing business there. A list of things that China would not be able to do is:
- Block mergers or acquisitions
- Collecting taxes
- Taking majority ownership of Bitmain, as it is a privately owned company there are no stocks to buy
among other things.
The Chinese operations of all companies with a presence there have to follow their laws such as Starbucks, Nike and Apple, but the rest of the company outside of China isn't bound to them.
They cannot take over the mining pools because that is private property of the corporations.
- Block mergers or acquisitions
- Collecting taxes
- Taking majority ownership of Bitmain, as it is a privately owned company there are no stocks to buy
among other things.
The Chinese operations of all companies with a presence there have to follow their laws such as Starbucks, Nike and Apple, but the rest of the company outside of China isn't bound to them.
They cannot take over the mining pools because that is private property of the corporations.
you're putting too much trust in the rule of law, and china's respect for it.
consider the recent case of okex---an exchange that left china, incorporated offshore in malta, and stopped offering CNY markets after china banned exchanges in 2017. 3 months ago, the CEO was arrested and held by chinese police. and then for a 5-week period, okex completely shut down all crypto withdrawals.
that's the kind of power the chinese government has. mining hardware companies and pools that have a physical presence in china, with executives/admins who have a physical presence and family/financial assets held there---they are not safe from chinese government influence.
January 11, 2021, 03:35:17 PM
I think that these ideas are exaggerated, I do not know why the Chinese want to control Bitcoin, they are already controlling the largest power of miners in the world and this brings them huge profits to companies that sell these products to all parts of the world, also controlling Bitcoin is useless Economic, that is, they need huge sums to attack the network and thus what will they gain, or rather what can China gain from controlling Bitcoin?
January 11, 2021, 02:01:54 PM
The future of bitcoin is uncertain for sure. There are lots of large moving pieces, China being the largest.
Anyone who states with any certainty what will happen with btc, is fooling themselves.
Anyone who states with any certainty what will happen with btc, is fooling themselves.
January 11, 2021, 01:02:22 PM
Ok I do believe this is a valid analogy but at the same time I do think we will have very different turn of events.
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Chinese government starts taking control of mining farms
✓
Many mining farms realizing what's happening since it would be in news so the miners will start fleeing the countries or will close up or go underground.
✓
The hash rate drops
✓
Not bitcoin itself but the transaction, trading will be prone to attack
✓
Huge opportunity will be created for the already existing mining farms and miners
✓
Hash rate recovers faster than ever
✓
The Chinese government can never try a stunt like this again and the people just hate them more.
✓
For me I do think this would happen. But then again we don't know. Let them try if they want to , we can recover , it's strong enough now.
---------------------------
Chinese government starts taking control of mining farms
✓
Many mining farms realizing what's happening since it would be in news so the miners will start fleeing the countries or will close up or go underground.
✓
The hash rate drops
✓
Not bitcoin itself but the transaction, trading will be prone to attack
✓
Huge opportunity will be created for the already existing mining farms and miners
✓
Hash rate recovers faster than ever
✓
The Chinese government can never try a stunt like this again and the people just hate them more.
✓
For me I do think this would happen. But then again we don't know. Let them try if they want to , we can recover , it's strong enough now.
January 11, 2021, 12:53:11 PM
in theory, if they control the mining network, they could freeze/censor transactions they believe are linked to capital flight. it's quite a paranoid theory but it makes slightly more sense than just outright 51% attacking the whole network or something. there's no point in that, as hash rate would just leave china and the compromised pools.
That's noticeable as well. If you want to effectively censor a transaction(s), you need to be able to mine every single block since other mining pools would probably be incentivised to mine those transactions if they aren't mined. It'll be apparent once the other mining pool realizes that they cannot mine any blocks and the same thing will happen. It'll be far more effectively to just execute a massive doublespend attack and massively devaluate Bitcoin at one go, at least they stand to gain something from that. 
January 11, 2021, 12:48:51 PM
They cannot take over the mining pools because that is private property of the corporations.
That is the thing about Communism, this is what they do. Communist parties do not care if it is private property or not.
They are able to relativize the property rights.
For example, chine communist party may just make a new law: "Mining equipment is now is vital for the national security and the government will acquire all equipment, buildings and installations of any related company"
They have done this over and over again all over the world and through out history. China, Russia, Venezuela, Cuba...
They could just do that again at any time it seems fit
51% attack is still pretty cheap if you are first world country. Nice way to destroy currency, isnt it?
Cheap? It would cost millions of dollars per minute and the amount of energy required is more than a few countries consume. It would be a continental class attack lol
I removed the remainder of the quote because it's literally the same exact point. 60% of the miners are within the geographical boundaries of China. This means that the government can potentially seize and control 60% of the network's hashrate.
You only need 51% to be able to have a 51% attack. Bitcoin isn't centralized but the concentration of miners makes it less than ideal.
You only need 51% to be able to have a 51% attack. Bitcoin isn't centralized but the concentration of miners makes it less than ideal.
This is somewhat alarming indeed.
January 11, 2021, 12:07:42 PM
Do you mean the Chinese government? Be precise, please. If so then I think it's great that they take their miners away. It will level the playing fields for the rest of us who don't have access to dirt cheap miners GPU's and almost free electricity with very cheap rent on storage houses.
Just because you can afford to buy 51% of the bitcoin doesn't mean that 51% of it is for sale. If 50% or more of the holders don't want to sell then you cannot perform the attack. I would say it is safe & if bitcoin could have been destroyed this way it would have a long time ago back when bitcoin was more affordable and there were fewer coins in circulation.
51% attack is still pretty cheap if you are first world country. Nice way to destroy currency, isnt it?
Just because you can afford to buy 51% of the bitcoin doesn't mean that 51% of it is for sale. If 50% or more of the holders don't want to sell then you cannot perform the attack. I would say it is safe & if bitcoin could have been destroyed this way it would have a long time ago back when bitcoin was more affordable and there were fewer coins in circulation.
January 11, 2021, 05:57:31 AM
51% attack is still pretty cheap if you are first world country. Nice way to destroy currency, isnt it?
January 11, 2021, 04:14:43 AM
4. Similarly to what they did with Jack Ma and Alibaba, they decide now that the mining system is developed they will simply take full control over it.
~snip
Is this idea over-exaggerated and paranoid?
~snip
Is this idea over-exaggerated and paranoid?
Yes. Let's imagine they tried to make Bitmain, which is based in a China, a state-owned company. Now Bitmain has control of two of the largest mining pools Antpool and BTC.com. They're also the world's biggest supplier of miners. But they are incorporated in Singapore, unlike Alibaba and other conglomerates which are incorporated in China. That means Bitmain is subject to Singapore's business laws not China's. China can only govern business practices that Bitmain does inside China (i.e. sale of their miners to China residents), and fine Bitmain if they break any Chinese laws while doing business there. A list of things that China would not be able to do is:
- Block mergers or acquisitions
- Collecting taxes
- Taking majority ownership of Bitmain, as it is a privately owned company there are no stocks to buy
among other things.
The Chinese operations of all companies with a presence there have to follow their laws such as Starbucks, Nike and Apple, but the rest of the company outside of China isn't bound to them.
They cannot take over the mining pools because that is private property of the corporations.
January 11, 2021, 03:29:20 AM
Forks are the best solution. If China decides to attack Bitcoin, they decide to attack the world's freedom. Take that as a war on it, which wouldn't end well for them. We'd just fork off the chain while changing the way Bitcoin works so that China doesn't have the control handle anymore. In the end, what the CCP will own is a ton of equipment that'd be redeemed useless every time they try to attack a cryptocurrency.. in other words, a waste of money.
January 10, 2021, 05:02:41 PM
I don't think China will take demonstrative steps to take over the mining business. Such actions are contrary to the Chinese mentality. Read The "Art of War" by Sun Tzu.
It is more typical for China to fight by relying not on brute force, but on complex strategic combinations. At the same time, controlling bitcoin mining and controlling bitcoin hashrate is one of the goals of the Chinese Communist Party. Bitcoin is a potential global reserve currency. China is interested in controlling bitcoin.
However, China will not commit inappropriate actions that would allow it to be declared an aggressor.
It is more typical for China to fight by relying not on brute force, but on complex strategic combinations. At the same time, controlling bitcoin mining and controlling bitcoin hashrate is one of the goals of the Chinese Communist Party. Bitcoin is a potential global reserve currency. China is interested in controlling bitcoin.
However, China will not commit inappropriate actions that would allow it to be declared an aggressor.
January 10, 2021, 04:45:23 PM
Why would they want to control Bitcoin? In the grand scheme of things, Bitcoin doesn't really affect them, if at all.
chinese people casually moved $50 billion in crypto outside the country last year: https://www.cnbc.com/2020/08/21/china-users-move-50-billion-of-cryptocurrency-out-of-country-hinting-at-capital-flight.html
a big chunk of that was bitcoin miners.
the government recently cracked down on shadow banks and foreign real estate schemes as avenues of capital flight. bitcoin must be a big thorn in their side as it soaks up the demand from those channels.
in theory, if they control the mining network, they could freeze/censor transactions they believe are linked to capital flight. it's quite a paranoid theory but it makes slightly more sense than just outright 51% attacking the whole network or something. there's no point in that, as hash rate would just leave china and the compromised pools.
January 10, 2021, 11:51:06 AM
3. CCP (Chinese Communist Party) decides that Bitcoin has reached its saturation and its time to take advantage.
It needs to be underlined, that every action taken by China aims to become an invincible country in any sector. so based on mining in China itself in 2018 there was a group of young people mining bitcoin using only a few computers, and were immediately arrested. This simple example of China has ambition without tolerance, and the rules apply to its own citizens. the Chinese government mines bitcoin for the benefit of those who don't want to be left behind in a cryptocurrency-based economy. let's say that mining in China is almost the largest mining company, and can only be managed and controlled by the Chinese government itself. if it is time they say to use it and leave mining, that means there is an end where bitcoins accumulate there.
January 10, 2021, 10:18:05 AM
This will probably sound like a paranoid lunatics question, so I apologize in advance.
this is not paranoid question, it is just an uninformed one.also should keep in mind that China doesn't even need 51% of the hash rate
actually in order to successfully continue a 51% attack you need a lot more hashrate than 51%, something closer to 70% is needed. otherwise theoretically you can perform the attack with a much less hashrate too and get lucky to get a random block replaced but not be able to grow it any longer and definitely not be able to reverse a high value transaction that needs more than 3 confirmation. January 10, 2021, 10:16:16 AM
It all boils down to motive. The CCP has known about the fact that over 60% of bitcoin mining activity occurs in China for a while but hasn't touched it. Like what ranochigo said, attacking bitcoin or controlling the network won't benefit them. I guess the only thing that can get them to take action is when other superpowers like the U.S. advance in their mining capability--meaning, more miners set up in them. Knowing how the CCP can easily feel insecure when another country tries to beat them at anything, I wouldn't be surprised if they actually take over their bitcoin miners, even if it costs more than it generates profit.
January 10, 2021, 05:06:27 AM
Building semiconductor foundries costs billions of dollars, takes decades and requires an enormous talent pool which is why almost all foundries in the world are located in east Asia, mainly China, Taiwan, South Korea and a little bit in Japan
the rest of the world is basically empty and don't have the talent or capital to build foundries
https://i.4cdn.org/biz/1610271676377.png
also should keep in mind that China doesn't even need 51% of the hash rate
there was a study a while ago that pointed out the fact that a determined attacker might just need 21%, the attacker could use dump his btc, lowering the price, forcing commercial miners (who need to be profitable) out of the game and slowly growing his initial 21% to 51% without actually acquiring more mining equipment
take a look at my picture, notice anything? why do you think they are so determined to take Taiwan? the sightseeing?
the rest of the world is basically empty and don't have the talent or capital to build foundries
https://i.4cdn.org/biz/1610271676377.png
also should keep in mind that China doesn't even need 51% of the hash rate
there was a study a while ago that pointed out the fact that a determined attacker might just need 21%, the attacker could use dump his btc, lowering the price, forcing commercial miners (who need to be profitable) out of the game and slowly growing his initial 21% to 51% without actually acquiring more mining equipment
take a look at my picture, notice anything? why do you think they are so determined to take Taiwan? the sightseeing?
January 10, 2021, 04:06:59 AM
There are many such people making the false statements that bitcoin is centralized and can be controlled by miners in China, the reason for their claim is because China has around 60% of the total world Bitcoin miners.
I removed the remainder of the quote because it's literally the same exact point. 60% of the miners are within the geographical boundaries of China. This means that the government can potentially seize and control 60% of the network's hashrate. You only need 51% to be able to have a 51% attack. Bitcoin isn't centralized but the concentration of miners makes it less than ideal.
January 10, 2021, 04:01:25 AM
There are many such people making the false statements that bitcoin is centralized and can be controlled by miners in China, the reason for their claim is because China has around 60% of the total world Bitcoin miners. But if you check about this indept, you will be able to know that bitcoin is not controlled by China.
Who are the people buying Bitcoin? Are they from China?
Most Bitcoin are mined in China is compared to individual countries, around 40% of bitcoin is not mined in China, most Bitcoin mined in China are bought but people from another country. So, Bitcoin is mostly mined in China, but not all is mined in China, while most of the Bitcoin mined in China are bought by people and institutions from another country. Some Chinese miners are even move to Siberia to mine while things can happen in the future to let some country you do not expect to evolve to mine Bitcoin.
Who are the people buying Bitcoin? Are they from China?
Most Bitcoin are mined in China is compared to individual countries, around 40% of bitcoin is not mined in China, most Bitcoin mined in China are bought but people from another country. So, Bitcoin is mostly mined in China, but not all is mined in China, while most of the Bitcoin mined in China are bought by people and institutions from another country. Some Chinese miners are even move to Siberia to mine while things can happen in the future to let some country you do not expect to evolve to mine Bitcoin.
January 10, 2021, 04:00:08 AM
5. If CCP is running the miners they are able to run them more efficiently, since they have way larger budget and can afford free electricity and all that.
6. At this point CCP is controlling Bitcoin network. What happens? If it is not cost efficient for other countries to setup miners to counterbalance this power dynamic, why would they?
Is this idea over-exaggerated and paranoid?
6. At this point CCP is controlling Bitcoin network. What happens? If it is not cost efficient for other countries to setup miners to counterbalance this power dynamic, why would they?
Is this idea over-exaggerated and paranoid?
There's no such thing as free electricity, especially not in the context of a government paying for electricity with taxpayers money. And seizing huge business is not really good for China, it might look great in short term, but this means that foreign companies will flee the country as quickly as possible, fearing the possible nationalization.
Even if CCP will control the hashpower, it's not the same as controlling Bitcoin. They still can't break the rules of the network or make a profitable double-spending attack. They could try censoring transactions, but Bitcoin community could agree to switch the mining algorithm to end this.
January 10, 2021, 03:59:08 AM
4. Similarly to what they did with Jack Ma and Alibaba, they decide now that the mining system is developed they will simply take full control over it.
Why would they want to control Bitcoin? In the grand scheme of things, Bitcoin doesn't really affect them, if at all. Attacking Bitcoin doesn't really benefit them and would just be a waste of time.5. If CCP is running the miners they are able to run them more efficiently, since they have way larger budget and can afford free electricity and all that.
They also need a huge land space and loads of people transporting and setting up the miners. That is if they acquire ASICs that makes up 51% of the network hashrate.6. At this point CCP is controlling Bitcoin network. What happens? If it is not cost efficient for other countries to setup miners to counterbalance this power dynamic, why would they?
We fork Bitcoin to another algorithm. CCP continues mining SHA256d coins only and we can easily shift to another algorithm. CCP doesn't have any advantage over another mining algorithm and life continues. One things for sure, they won't gain any tangible benefits from that. It's much more likely for pool owners to collude than the CCP intervening.
January 10, 2021, 03:52:29 AM
This will probably sound like a paranoid lunatics question, so I apologize in advance.
People often use the FUD argument that "Bitcoin is centralized by Chinese market", which is debunked by "Well, other countries can setup miners, too, to balance the power!"
But what happens in this scenario:
1. Bitcoin grows and becomes a stable asset gaining dominance
2. Chinese miners still control majority of Bitcoin mining
3. CCP (Chinese Communist Party) decides that Bitcoin has reached its saturation and its time to take advantage.
4. Similarly to what they did with Jack Ma and Alibaba, they decide now that the mining system is developed they will simply take full control over it.
5. If CCP is running the miners they are able to run them more efficiently, since they have way larger budget and can afford free electricity and all that.
6. At this point CCP is controlling Bitcoin network. What happens? If it is not cost efficient for other countries to setup miners to counterbalance this power dynamic, why would they?
Is this idea over-exaggerated and paranoid?
People often use the FUD argument that "Bitcoin is centralized by Chinese market", which is debunked by "Well, other countries can setup miners, too, to balance the power!"
But what happens in this scenario:
1. Bitcoin grows and becomes a stable asset gaining dominance
2. Chinese miners still control majority of Bitcoin mining
3. CCP (Chinese Communist Party) decides that Bitcoin has reached its saturation and its time to take advantage.
4. Similarly to what they did with Jack Ma and Alibaba, they decide now that the mining system is developed they will simply take full control over it.
5. If CCP is running the miners they are able to run them more efficiently, since they have way larger budget and can afford free electricity and all that.
6. At this point CCP is controlling Bitcoin network. What happens? If it is not cost efficient for other countries to setup miners to counterbalance this power dynamic, why would they?
Is this idea over-exaggerated and paranoid?
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