These miners are probably making USD or some other foreign fiat at the end of the day which adds to the supply of foreign reserves without needing to use trade... And if they're siphoning power to get around currency exchange limits moving wealth abroad then a traditional crackdown to confiscate their equipment would be much more effective (you can't exactly "hide" a mining operation).
Frankly China, with so much mining output, benefits more from seeing crypto moon than crash...
(Also "collapsing the price" is something that can be done (and may have actually even already been done in the past) with far far less effort than an attack...
(As one example, articles pointing out that "China can do 51% attacks" are much more effective in crashing crypto prices... maybe keep an eye out for those
The minors are not making USD for foreign reserves to be honest, they are mostly a way to transfer wealth out of the country (buying equipments and electricity and sell bitcoins abroad or not selling it at all). That's why China has banned its bank to do crypto related transactions and exchanges mostly. However, it is hard to enforce. You can find many exchange use Bank Transfer, AliPay and WeChat pay.
Owning Bitcoins are legal in China. Who knows once the digital RMB is out.
Every time a miner exchanges crypto for RMB (like with Alipay or WeChat), China overall benefits a bit. Because Chinese banks (as you correctly stated) are not allowed to hold crypto and exchanges are illegal, what really happens is the crypto gets exchanged for foreign fiat (like USD) where exchanges are legal, which then gets exchanged for RMB, building up foreign reserves.
In the past, a lot of miners were "foreign investors" (likely other Chinese "nationals" rather than citizens) who lived abroad and would keep the exchanged fiat in foreign bank accounts, which _is_ harmful as they pay for electricity with RMB but get to keep USD. In recent years, a lot of local mining outfits are appearing, and because they ultimately need to spend RMB, the government has no problem with turning a blind eye to them.
Yes, it is illegal for Chinese banks to do transaction for cryptos, but it is still legal to transfer money to others in exchange for crypto (p2p). WeChat, Bank Transfer and AliPay all being available in exchange. Holding crypto is not illegal in China, also mining is not illegal.
I believe there are still a lot shady business going on for those buying cryptos with RMB. It is quite easy for Chinese to buy/sell crypto at the moment.
Actually the same happens in stock market. When Chinese companies go for IPO in the US, they will typically keep the fund in US, rather than bring them back to China to make it easier to do business in dollars without restriction of Chinese financial system.
If a government moved to confiscate all mining operations and run them itself to perform such an attack, the fight such people put up against that would be so obvious that it would be incredibly easy for parties external to the situation (Bitcoin devs + Node operators outside of China) to stop any ensuing Sybil attack. They’d just blacklist Chinese IPs from the network statically in the client code—effectively hard-forking the other 49% of the network in advance so it doesn’t later become confused.
Bitcoin mining has outgrown this stage. It's more like companies, now.
> the people who mine Bitcoin don’t like governments very much, and wouldn’t cooperate with a government-imposed Sybil attack...
Early Bitcoin proponents don't like governments much. Chinese miners are another story. They see a business opportunity and have no interest in losing social credit points or, worse, going to a labor camp.
Myself - I pay my 28%. No loopholes.
The Chinese government has shut down Bitcoin transactions in China before because it goes counter to their centralized economic control. If uppity insurgents or billionaires who they wish to punish (e.g. Jack Ma) are heavily invested in Bitcoin, they may want to crash it. Alternatively, it may be seen as a way of people to launder money outside of China and their control. Maybe just want to throw other financial markets into chaos.
Why would the miners cooperate? I can think of 7.62 reasons why.
Bitcoin gets around those - which is why it’s popular there, and also why I think it’s likely China will ban Bitcoin at some point.
Bitcoin is an economic weapons created by the chinese government.
If you're a nation state, and want to undermine the legitimacy of bitcoin, you can easily just institute laws to ban it. Much cheaper.
The fact that mining operations still exist today at large scales in China means that at least the government has found a way to profit off of crypto (strategically or economically).
Or government do not really care. If it is officially discouraged/illegal: it also means that officials are happy to take bribes.
Closest thing to that I can think of is nuclear proliferation but you’d have to get countries to agree and play strong arm tactics. Possible I guess but not “easily”
Might makes right, aka USA foreign policy since its inception. US sanctions are applied for everyone - e.g. if the US sanctions Iran, a French company does business in Iran, the US fines them heavily. And considering the US market is more lucrative than the Iranian one, most companies would prefer to have the US one. For a recent-ish example, check BNP Paribas. The US has no legal right to forbid a French company with a US branch to not do business with another country from another branch besides when they say so. The same way they say so for crimes against humanity, or invading other countries.
So the US can absolutely ban cryptocurrencies on a global-ish scale.
A significantly powerful actor could exert sufficient force. Russia or the US threatening nuclear war over bitcoin would probably lead to a worldwide ban, although obviously the repercussions would be dramatic. More realistically, the US could state that any bank that does business with bitcoin isn't welcome to participate in the US economy. The US economy is big enough that such a threat might work. This is similar to how the embargoes against Iran worked, and why that Chinese executive is being extradited to the US from Canada.
In reality, if Bitcoin got the point of destabilization where the US felt the need to ban it, the effects would probably be widespread enough that the EU, Japan, the various Commonwealth countries would be convinced to take coordinated action.
If the the majority of the network agrees on the the new fork who is to say that isn't the de facto "real" fork?
They're is literally no way to know what really happen.
If you were running your own pool then people would likely be tracking your pool and know where you're located. But if you are keeping a low profile and participating in a variety of other pools, then you might go unnoticed. But still, the pool operators might track which IPs are submitting work, and geolocate them, and see which countries are dropping in their work submissions. If you had ran all your stuff through a Chinese VPN historically, then it would make sense. Although usually you want the lowest latency possible when mining to avoid losses due to submitting stale work. A VPN would probably hurt your profits a little.
But considering that there is so much money at stake, an elaborate plan like this... It's possible. Actually it's not even that elaborate. You just need a vpn, and do the split based on news.
https://www.reddit.com/r/MoneroMining/comments/9sph9w/does_n...
https://ethereum.stackexchange.com/questions/18201/does-netw...
This assumes the existence of a legal system with coercive power, which bitcoin doesn't have. That was the point of bitcoin to begin with, in fact.
I mean if you did this IRL, the party providing the goods would just report them as stolen and the traditional legal system can be used to retrieve them. Have fun arguing in court that a 51% attack somehow means you get to keep the thing. This is no different from paying for the thing and stealing the money back IRL. The only thing crypto allows you to do is to distance yourself _physically_ (i.e. you don't actually have to break in and steal money), it means f*ck all _legally_. A similar existing situation analogous for 51% attacks is "paying for something with a personal check and later having it bounce".
In fact all major breaches of crypto today involve stealing the coins themselves, which as commenters below have mentioned, cannot be done with a 51% attack---you still don't have the private keys.
A 51% attack mainly lets you double spend, so you have to: (1) get a lot of coins and spend them on something (2) start mining a fork where that spending didn't happen (but other real transactions continue to happen) --- your hash power will now need to be dedicated to this new fork at the exclusion of the old "real" fork since all future hashes will diverge (3) wait until the thing you paid for with coins can no longer be "taken back", all while continuing efforts on the alternate fork (4) do the 51% attack to swap out the old "real" fork with your new fork where you never bought the thing, thus keeping the thing _and_ the coins you spent on them (5) all this needs to be balanced with the opportunity cost had you just continued mining on the real chain...
Such an attack would trigger immediate attention since at (2) the main chain would suddenly see a drop in contributions. Also realistically most things you can purchase with coins (like fiat or other goods/services) can be relatively easily "taken back" unless a considerable amount of time is spent to launder them --- say if you "buy" a car with crypto and reverse the transaction, what you've really done is just stolen a car with a lot of extra steps... Which means your only real viable path is to redeem for some other cryptocurrency... Now given that a big attack just happened on the largest market cap crypto, there's a pretty good chance the other coins are going to take a hit and exchanges might even temporarily limit activities while this situation is "investigated", greatly reducing what you can actually do at the end of the day.
This kind of thing is more reasonable on the smaller market cap "meme" coins where you can just exchange them for for a mass-market crypto.