I have a new article over at Bitcoin Magazine called, Bitcoin: Made in China.
It’s based off a paper (pdf) I have been working on and is the culmination of numerous exchanges and conversations I have had over the past couple of weeks.
Another interesting article on this subject of capital costs is this recent one by Dario Di Pardo, $46K Spent on Mining Hardware: What Happened Next?
There are several people to keep your eye on for analysis in this space (such as those in the acknowledgements portion of the piece). Dave Babbitt is working on his master’s thesis on this specific issue (hence his up-to-date numbers), Jonathan Levin is about to defend his thesis (which goes into several mining models), Robert Sams is brilliant with both econometrics and with understanding incentives and Cal Abel speaks in a whole new different league. I also had some illuminating exchanges with John Ratcliff (he posted some subsequent comments over here). Andrew Poelstra has a very critical eye and sharp mind for any logical errors and Bryan Vu is both articulate and provided some good counter-points to the hypothetical trend lines. Dan Forster and Karl Holmqvist helped spark the initial barage of questions, Joseph Chow helped tweak the responses and Petri Kajander made sure my writing was coherent. Also, thanks to Ruben Alexander, editor at Bitcoin Magazine for his encouraging words.
Lastly, my sources in China including Weiwu are without a doubt, resourceful and survivors. That region of the world is a very tough market and unfortunately doesn’t receive the respect it deserves.
For instance, below is a Figure 4 from the new U.S.-China Economic and Security Review Commission (pdf) by Lauren Gloudeman.
Thus the next time you hear someone on reddit complain about China in relation to Bitcoin or tell you how Chinese demand did not impact prices, show them this diagram. Who will replace the Chinese whale? Maybe Wall Street.
Also send them here: Fairweather fans in bitcoinland disowning China