The concentration of bitcoin mining power in China continues to raise concern in the bitcoin community. A recently produced TechCrunch video, based on Nathaniel Popper’s book, “Digital Gold,” offers an overview of bitcoin mining, including footage from inside of a Chinese mine. Several prominent bitcoin executives offer their views about the issue.
The video is titled, “Mines and Miners | Truth Disrupted: Bitcoin and the Blockchain.”
Mining Becomes Specialized
When bitcoin began, miners were the “fanatics” who had fallen in love with bitcoin, noted Popper. But over time, mining has become a specialized profession available to those who have the ability to set up mining centers.
“That’s become something of a problem because the design of the bitcoin software gives decision-making power to the miners,” he said. “These miners around the world have a sort of voting power over the bitcoin software and what bitcoin itself looks like.”
Bobby Lee, CEO of BTCC, a Shanghai bitcoin exchange and mining company, explained that bitcoin’s founder, the eponymous Satoshi Nakamoto, saw mining as a way to award new bitcoins in a fair manner. “The only fair way he came up with was to give it for free to whoever wants it,” Lee said.
Gavin Andresen, chief scientist at the Bitcoin Foundation, explained how miners form bitcoin blocks and race to provide the canonical record of bitcoin transactions in exchange for being rewarded newly-mined bitcoins.
Price Rises As Less Is Mined
As the bitcoin price rises, it incentivizes a miner to activate their mining equipment, said Dave Carlson, founder of Megabigpower Bitcoin and Ether Mining Company, which is in the United States. Miners produce less bitcoin over time, he said, but the value of each bitcoin rises.
Popper said the industry has reached a point where the determining factors in who can profitably mine bitcoin is access to cheap computer hardware, and access to cheap electricity. “Right now, the place where those two things are easiest to find are China,” he said, noting that two thirds to three quarters of all bitcoins mined come from mining installations around China.
Scenes From Inside A Mine
The video then shows the inside of a Chinese mine, with employees being fed their daily meals and enjoying recreational games.
