Q: Last weekend IBD published an article (Dec. 10 issue on page A20) regarding the Chinese domination of 80% of the Bitcoin mining, essentially giving them control over that space. It seems this could have potentially dire implications from people with interests not aligned with our own.
In your next Crypto Report, hopefully you can incorporate what this could mean going forward. It was my understanding that the biggest advantage to Bitcoin/Blockchain technology was that it was basically autonomous and built to be immune to exactly this sort of issue (control by any one government, or any other group of people).
A: The media (and many crypto analysts) always get it wrong (as far back as 2012 from what I've observed). It matters not whether it's a country or group that dominate bitcoin mining. Each person is acting in their own selfish interest. Thus there is no possibility of gaining control over the space. It's akin to saying 98% of Chinese own BIDU so they can conspire to manipulate its price. It would never happen because each stock holder is acting in their own self interest. BTW, China has dominated bitcoin mining for much of the time since 2013.
As for bitcoin mining being too expensive, supply/demand overtakes such that miners drop out thus increasing profitability. Eventually, mining becomes profitable again. This has been the rhythm of bitcoin mining since it began, so when media says bitcoin will collapse because one bitcoin is worth less than the cost of mining, they forget about supply/demand.
Crypto Report - Panic re: Bitcoin mining is no longer profitable + China controls 80% of bitcoin mining
| Published: | 20 Dec 2018 15:57 ET |
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