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Comment by SeoxyS | Hacker News Reader

For anyone wondering how BTC is used as a way to evade Chinese currency controls, I just came to this realization today: people aren't buying bitcoin locally to send it out of the country: they're buying cheap coal electricity, using it to mine bitcoin, and then liquidating that in foreign exchanges.

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This realization is incorrect. The amount of BTC generated globally[1] per day is minuscule compared to CNY/BTC volume[2]. Besides, they're selling the BTC they mine for more yuan.

[1] $7M [2] OKCoin.cn alone does $100M a day on the BTC/CNY pair.

That CNY traded in China remains stuck in China. Whoever sold the BTC for CNY now has to deal with the restricted currency

Presumably most of that BTC/CNY trading is being traded for capital gains, not as a way to try to evade currency controls.

The same could be said for any export they produce in China doesn't matter if it is Bitcoin or tube socks.

There's only around $8M a day in mining, at today's prices. So half that a month or so ago. Minus actual costs for ASICs and electric (a significant amount!). It's some flow, but can't justify the trade volumes right?

doesn't that mean 'almost free foreign currency' for the Chinese? why block free money? it's not like yuan is leaking out...

which, now that I think about it, isn't that different from using the electricity to produce widget, export the said widget, and get dollars in return

I'm sorry but you're completely wrong on this one, see other comments.

Moreover most big mining operations use alternative energy sources, usually hydropower.

Power is fungible. Hydro power capacity is capped. Any amount of energy derived from hydro power increases demand from coal from someone else by an equal amount.

That's not evading currency controls, it's called exporting. It's not illegal, it's encouraged.

Why can't one just buy BTC in yuan and liquidate it in another foreign currency?

Who wants to sell you something that's not restricted for something that is? Unless you're willing to pay a significant premium over its real value.

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