Topic: The proof is in the pudding: chinese are participating en masse, price not up (Read 3629 times)

Really awesome post - thanks for sharing.  Hopefully the experience and knowledge gained allows you to continue to do well. 

That first guy seems to be playing some game though

I don't understand what you mean? Could you tell a little more?

That's very interesting. I've studied mining. Your info means people that invested in pre-order asics will likely still do well.

At the same time I think we can expect overcapacity at one point, just like in 2011 after the bubble, likely again when btc prices are bottoming out in this short-term bear market over the coming year.

So I think it's not wise for asic investors to reinvest quickly over the coming 6 months. Better to wait as chances are high many asic miners will go broke 6 months later and you will get the equipment for pennies on the dollar.

What are your thoughts about this?

Mining difficulty is lagging price too much, so we are due to see more miners enter the market.  It just doesn't make sense that even inefficient GPU miners can make 9-10X the cost of electricity in profit, it's unsustainable.  When difficulty reaches par with price price will be inevitably pushed up.

Note that the last big rally up to $266 began right around the time of the reward black halving, no coincidence.

I have to agree. It makes sense for the Chinese to mine.. The government doesn't want them to buy bitcoins, they want them to control bitcoins. The way you control bitcoin is by having all the hashrate.

I'd say it's a very deliberate move on the governments part. Think about how much money they invest into hacking.

This is just more of China's expanding soft power... Expect them to be pumping out ASICS by the bucket load. Still, it can only be good for the coin... maybe... unless western governments will intervene.

Still short term, I'm holding. Hashrate is going up.. so will the price for sure!

Fresh from xinhua: 政府説矿山比特币
 "Chinese government commands hacker division to ramp up bitcoin-mining"

Thanks for validating!

I like bubbles 

The Chinese people are mostly miners, they are here looking for free money, not giving you the free money.

If you can read a bit of Chinese, you can browse the Chinese sub-forum here, most of them are discussing Bitcoin mining or Ripple, it is silly to assume that they would inject a huge sum of money into the market.

I am not saying they won't but not in the near future, also bear in mind that when Bitcoin is becoming too dominant in the economy that would threaten the leading role of CNY, the communist party would brutally crack down and outlaw its usage. It is not a hard task to accomplish, they only need to shut down btcchina and block all the exchanges overseas with their internet firewall.

I would have if I had held on to them all.  I sold or spent almost every Bitcoin I've mined though, many at low prices ($3-$6 during the 2011 climb, and more at $5 or less after the crash).  And that amazing mining period where difficulty was less than 100,000 only lasted for a short time.  It didn't take long before it was over 1M.  At my peak, once I received the 6 new GPU's I ordered a couple days after finding out about Bitcoin, I was generating 8 BTC/day.

I think I've mined somewhere around 600 BTC, but I only have 10 BTC to show for it today.  Hindsight is 20/20, and especially back then, I wouldn't have believed you if you told me Bitcoin was ever going to go back above $31.  But part of the reason I sold is the financial difficulties that I was going through at the time, with our first child, new house, work life changes, etc.  Our annual household income has actually gone down every year for the past 5 years, and the only reason we've been able to pull out of it ahead is because of Bitcoin.  I still made around $5000 off that initial $1100 investment into GPUs/computers, and I'm set to be reaping the proceeds from additional investments as soon as BFL starts delivering singles.

I am was a weak hand.  Now that we're on a more financially stable ground, I'll be very likely holding the vast majority of Bitcoins I mine in the future.

Man...

I still haven't been able to figure out how to mine in the first place. Not that it would be of any use right now anyway. My computer can barely run Skyrim.  

Did you make a fortune?

The good thing about China investing a lot in mining is that they are in it for the long haul. Mining is finite. Soon they will hunger for MOAR!

I actually got the blockchain downloaded and started mining 3 BTC/day on my one GPU the day I found out about Bitcoin. 

What did anyone expect?

That is also why they hoard rare earth metals and gold. China is investing heavily in mining globally. I would expect they will be buying bitcoins soon. They may simply not have an easy market for them.

Early adopter miners are shutting down their GPUs in the US. If China is building ASICs and not exporting them, the rest of the world is screwed as far as mining.

Why would the price have to shoot up? Inflating a new bubble isn't a necessary requirement to stop a bubble from deflating or is it?

speculation - Chinese may be more interested in mining than in buying BTC...


longer term transferral of wealth from US (and other western countries) to China - sounds about the right kind of mentality? US no doubt account for the majority of BTC holders and miners at this time

We're planning to open a similar service in the coming months that will cover all SEPA countries. It will be English only at first but we're planning to translate to all the major SEPA area languages.

Yes very interesting indeed. Thank you.

If your website would be available in English too I would have considered using it also.

Yes, that pretty much sums it up. We don't actually have "accounts", we're simply a brokering service. Euros and bitcoins come in, and they go out. Occasionally we do return funds if people cancel orders. Higher amount of buy order cancellations is one sign of people getting scared.

This is not the situation as it is now, I'm not interested in revealing our current tendencies. But it was very interesting that even when the bubble popped all the way to $50-$100 a lot of people were suddenly scared of buying, although they were quite willing to buy at $200+ just a day before. That's just how it goes, I guess.

Is that so? How do you know?

That could be important difference indeed.

That's very interesting! Thanks so much for sharing. So does that mean that you noticed that many new users that transferred fiat to the exchange didn't use it but instead kept it there are withdrew it again?

For me it was the inverse. I first bought coins on an exchange and stored them in blockchain wallet.

Only later I figured running the software to support the network was important to.

I think we might assume that it's equally spread meaning the big amount of new nodes in China, also represent the big amount of new btc owners, that have bought already.

Many more may follow, but I'm not convinced they will be able to reignite the bubble.

The cheer amount of numbers we see popping up on the 3d globe in China represent a much lower purchasing power than the similar amount of nodes in the West.  

The amount of nodes shot up in the past week.

And they're downloading the blockchain right now.

Over Tor...

they produce them.

How did they get mining up so fast? Is China hoarding ASICs?

Op: How long were you running a node before you actually were able to get your hands on bitcoins?

I had 0.01 bitcoin (received from a friend) for a good 2-3 weeks in my wallet before I actually traded USD for bitcoins on an exchange.

It's different for everybody but most of those nodes are probably popping up out of curiousity for now.

Until btcchina grows much larger, the price there is largely influenced by MtGox and not vice versa.
Look at the fundamental, more people knowing Bitcoin is never a bad thing for Bitcoin.

I've noticed this effect first hand recently as I run the biggest exchange in Finland. My rational thought on price decreases is that it's a better buying opportunity (I should be buying more) but for many regular people the effect is the opposite. But I consider them sheep. Recently a lot of coins have moved from weak hands to strong hands which is nice to see.

Agreed, but let's never forget that media appearance, just like hashrate, and amount of posts here, is a lagging indicator of price.

First comes the bidding up, only then the media appearances. Once it hits the media, the rise is done already.

The loop you refer to is true. Media appearances add more people, but these people are not making the price. They will follow. Meaning if price goes down, like today, they will turn bearish and will buy less as originally planned.

What's funny?

Thanks! Good argument.

Indeed, and it will take another year before Chinese speculators have an influence on the price.

Just like the Cyprus story was total BS as an explanation for the rising price.

I also think price is set by the western speculators and western early adopters (many of whom foolishly believe stories like Cyprus people and Chinese people are bidding up the price).

No need to mock my argument.

My returns have been very good actually. I bought my stash around $12 in oktober 2012. Sold half my coins into the bubble (average selling price $180), bought most of them back into the crash  (average buying price $70), and sold most of these again into the rebound (average selling price $140). I made more than a simple buy and hold.

I also gave valuable advise here - during the bubble - to be careful.

What about you?

The only legit way to determine the sentiment in China is the price gap between BTCChina and GOX. There is no gap right now, which means neutral.

During the Coinlab lawsuit crash, the price in BTCC was 10% higher than GOX

The people who react fast to this stuff will buy within 1-2 weeks. Those are the fast movers. Then we have bunch of people who will react to it in the coming months and years.

Most of the rebound from the chinese news is from western speculators. The usage and volume in China is increasing at a high rate, true, but the market is still controlled by western speculators.

Agreed, it takes a lot of time before people jump in. But howcome the amount of nodes did shot up a lot the past month while the price did not?

I'm sceptical towards the china story because, well they are late to the party as usual. I remember how everyone went into 'emerging markets', and talk about 'china to the sky' at the end of the commodity and real estate bubble in 2005-2007. They added to the bubble, but certainly followed into the crash. There are no wonders coming from China, they are followers, not leaders, in my opinion.

This means that the bitcoin story being on national tv, is the same as it was a month ago in the West. Just a little later. Will at best keep the bubble from collapsing fast I think. As we are seeing today.

Let not hope prevail over empirical evidence!  

Have you considered the time it takes for these things to take off?

First people have to be exposed enough to finally decide to jump on the train. After that comes figuring out how to do it. Then you have to wait for the bank transfers to process etc.

I would say that we could start evaluating the effects of china at the start of next week or so, at the earliest.

Oh dear then it's all over isn't it? Well done for spotting that. I've now panic sold all my coins.

If you can only interpret this as bearish then I won't be taking any advice from you in the near future

Mwahahahahaaaaa

Looking at the 3d globe, the chinese have added nodes en masse the past month, surpassing USA and almost Europe too.
http://blockchain.info/nl/nodes-globe?series=48hrs

However, the price did not shoot up, so I wouldn't count on them on rescuing us from the bubble deflating.