Bitcoin mining in East Asia: China has the most horsepower, while South Korea and Japan are not Buddhist

Yin Yi

Welcome to the magical world, it's all about Bitcoin.

"Can you sing the song when the seven dwarfs appear in the old Disney movie Snow White?" Seeing the First Financial reporter who was suddenly confused by the question, Park Eun-ji (pseudonym) showed a big boy's Korean smile on the other end of the video call, and then sang to himself, "We dig dig dig dig dig dig in our mine the whole day through, To dig dig dig dig dig dig is what we like to do. ... (roughly means: "We dig dig dig dig dig dig dig all day long, digging dig dig dig dig is what we like to do.") Park Eun-ji said, "This song is simply describing our life." Then there was another burst of laughter.

Because of his name, Park Eun-ji is often considered to be Korean. In fact, he is a Korean student from Jilin, China, who has been studying information technology at a university in Seoul for nearly three years. Apart from attending classes, being a "miner" may be one of his few hobbies. He is not digging a coal mine, but a "gold mine", a Bitcoin "mine".

"I just treat this as a hobby after studying professional courses, and don't expect to really produce much. What's more, I have too few equipment and the electricity bill is too expensive, so I can't produce much at all." Park Eun-ji told Caixin that according to his understanding, there are some "miners" in South Korea who have large factories. Although they may not be comparable to some factories in China, they should be able to compete with their counterparts in another neighboring country - Japan.

"Because China's output is so high (accounting for about 70% of the world's total), there is obviously no comparability if we use them for comparison. However, if we compare the Bitcoin 'culture' of South Korea and Japan, some of the conclusions we draw may be quite interesting," said Park Eun-ji.

It is worth noting that the Japanese government has become more cautious in its stance on Bitcoin, and seems to be moving closer to China and South Korea. Last week, Japanese Finance Minister Taro Aso said that Bitcoin has not yet been proven to be a credible currency, so Japan still needs to observe it more carefully. Earlier, French Finance Minister Bruno Le Maire said that France will propose to discuss the regulation of virtual currencies such as Bitcoin at the G20 summit next year.

Compared with armaments: Do Japanese "enthusiasts" prefer DIY?

Yongsan Electronics Commercial District in Hangang Road, Yongsan District, Seoul, is the largest comprehensive electronic commercial district in South Korea, with a total of 10 shopping streets gathered here. "South Korea itself is a strong country in electronic technology, and the status of Yongsan Electronics Commercial District can be imagined." Park Eun-ji introduced that the main reason for mentioning Yongsan is that this area has a different meaning in the eyes of "miners" - many people speculate that it may be the area with the most concentrated "mining machines" in South Korea.

"Mining machines" are actually computers used to obtain Bitcoins. They are usually equipped with special mining chips, which are extremely harmful to graphics cards and consume a lot of electricity. With the emergence of the "mining fever", the cost of "mining machines" has also risen sharply. "It is mainly because of the rising prices of graphics cards. International students like me cannot afford to purchase them in large quantities, but from observation, it seems that it has not stopped the enthusiasm of others." Park Eun-ji said.

Local media reported earlier that some rented shops in the Longshan Electronics Commercial District were used for Bitcoin "mining", and some specialty stores even had more than a hundred "mining machines" working at the same time, causing a surge in electricity consumption in the area. Even appliances with higher power consumption, such as air conditioners, would trip when they were turned on, posing a huge safety hazard. In the end, the management unit of the electronics market had to step in to restrict it, but it did not completely ban it.

Compared with the situation of their Korean counterparts, the creativity displayed by Japanese "mining" enthusiasts is full of "Japanese freshness" and full of DIY fun.

According to local Japanese media reports, some enthusiasts believe that the existing "mining" method is too environmentally unfriendly, so they DIYed a human-powered "mining machine", which can generate virtual currency Monacoin equivalent to 0.002 yen by shaking the power pole continuously for one hour. The inventor does not seem to mind the efficiency issue at all, and only thinks that environmental protection and exercise are more meaningful.

If the DIY "mining machine" is closer to being funny, then the "conglomerate" characteristics of Japan's "mining" are more obvious.

In September this year, Japanese Internet giant GMO Internet Group announced that it would invest $320 million (about 2.1 billion yuan) in Bitcoin mining and plan to independently develop chips to subvert the mining field. The company's CEO also claimed that it would be a new generation of "mining machines."

From this, it is not difficult to see that the "arms race" in the "mining machine" field has already started to a certain extent.

Competing in "financial skills": Mrs. Watanabe is more fashionable

In September this year, Chinese regulators closed domestic virtual currency exchanges and banned the trading of Bitcoin with RMB. Since then, the trading volume of Japanese yen and Korean won has accounted for nearly 60% of the global total. Therefore, it is entirely possible to assume that the competition between Korean and Japanese investors in "financial skills" has already begun.

"Mrs. Watanabe" refers to Japanese housewives, who are famous for their keen market sense, just like "Chinese aunties". They use their own savings, their husbands' income or family funds to increase their funds by investing in high-yield products and foreign exchange transactions abroad while the Bank of Japan maintains low interest rates for many years.

This time, the "Mrs. Watanabes" are back, and they have set their sights on Bitcoin.

"The activity of Japanese investors in Bitcoin trading has increased significantly this year. This group of people originally liked to speculate in foreign exchange, but now they also allocate some virtual currencies." Many people in the Japanese blockchain circle who were interviewed told the First Financial reporter.

Since the beginning of this year, the price of Bitcoin has risen nearly 20 times. In particular, the use of Bitcoin for payment in daily life in Japan has also increased significantly, boosting local Bitcoin demand and allowing the always sensitive "Mrs. Watanabe" to smell the opportunity to buy and make a profit.

In fact, in many shopping malls in Japan, you can pay with Bitcoin, and there are signs everywhere saying "Bitcoin payment is available". Even when walking on the streets of Tokyo, you can often see cars with advertisements for bitFlyer, Japan's largest trading platform, passing by.

"Large trading platforms like bitFlyer have also received investments from influential financial institutions in Japan, including the three major financial groups Sumitomo Mitsui , Mizuho, ​​and Tokyo-Mitsubishi UFJ, which has made the Japanese very confident in Bitcoin transactions," Token News Japanese researcher Atsushi Minamichi told China Business News.

After Japan's three major banks invest in the exchange as shareholders, individual investors can directly bind their bank accounts to trade. The big banks have obvious advantages in KYC (know your customer, including account real-name and background checks), which provides confidence and security for investors.

Just in December, a delegation of Chinese blockchain professionals visited Japan. Another member of the delegation told reporters that Japanese people rarely talk about their bitcoin trading in public, but it is obvious that Japanese licensed exchanges are developing rapidly due to policy support. An important background that cannot be ignored is that the Bank of Japan has high expectations for building a cashless society, and the Japanese government has also introduced tax policies related to digital currencies.

The latest statistics from Bitcoin Japan Information Network show that in November this year, Japan's bitcoin trading volume exceeded 12 million, which was equivalent to approximately US$96 billion based on the price at the time. Among them, bitFlyer accounted for more than 60% of the trading volume in Japan.

According to the statistics of information consulting provider Coinhills in the past 24 hours, Japan is currently the country with the largest Bitcoin trading volume in the world, accounting for 46% of the global trading volume. South Korea ranks third, accounting for about 13%.

Comment on regulation: South Korea is more stringent than Japan

Although South Korea and Japan are very close, there is a big difference in the degree of strictness of their Bitcoin regulation policies. Judging from the current signs, South Korea is far more stringent than Japan.

Although Japan has become the largest trading platform in terms of trading volume, the development of Bitcoin in Japan has not been smooth sailing. In 2014, Mt. Gox, a Bitcoin exchange that once handled more than 70% of the world's Bitcoin trading volume, had a major "blunder": 100,000 of its own Bitcoins and 750,000 Bitcoins of its users were stolen, and it subsequently declared bankruptcy, which made Japanese investors discouraged about Bitcoin for a time.

It was not until April this year that a series of regulatory policies on encrypted digital currencies by the Japanese government came into effect. Japanese investors believed that there was regulatory protection and began to pour in in large numbers.

Rumi Kobayashi, a researcher at QRC, a Japanese blockchain regulatory technology company, told Caixin that Japan has very strict regulations on virtual currencies. On the one hand, the Japanese government has made it clear that virtual currency transactions are regulated by the Japanese Financial Services Agency. Applications to open exchanges in Japan require strict qualification review, and new digital assets listed on exchanges also need to be reviewed and approved by the Financial Services Agency. At the same time, Japanese exchanges are also very strict in reviewing investor qualifications.

Kobayashi Rumi and the reporter mentioned an "episode" that one of her colleagues from Taiwan, China, missed the "best" buying opportunity when the Bitcoin price fell back last week because of the strict KYC system of the Japanese trading platform when he first came to work in Japan. "He registered a bitFlyer account on December 14, and has not yet passed the KYC, so he watched the Bitcoin price, which had fallen by one-third, rise again. Moreover, he encountered many audits during the application process, the most important of which was that he had to receive the registered letter from bitFlyer in person. It was not until December 25 that the letter was shown as 'sent', but it has not been signed for today (27th)."

Chinese blockchain-related groups visited Japan and found that although Bitcoin transactions are free, the regulatory system behind it is also very strict.

Similar to Japan's heavy advertising on buses, a Korean exchange called Coinone also put ads on buses with the slogan "Start Bitcoin trading from the safest Coinone." Advertisements for various trading platforms can also be seen in subway stations in Seoul.

However, this kind of misleading exchange advertising will gradually be reduced in scope and terminated after December 22, because the Korean blockchain and virtual currency private self-regulatory organization "Korea Blockchain Association" issued industry regulatory terms in the middle of this month, stating that virtual currency exchanges in South Korea can promote the security of the exchange, but cannot publish advertisements that induce investors to buy digital assets, and are not allowed to organize promotional activities such as "joining the association and giving away Bitcoin."

"In addition to curbing advertising, South Korea's Ministry of Finance and Planning also introduced this month what are considered to be the 'strictest' regulatory measures in South Korea's history against Bitcoin. The South Korean government will proceed to amend relevant laws and submit them to the National Assembly for a vote." Park Eun-ji told reporters that once these policies are implemented, many things will now be considered illegal.

At the end of the interview, Park Eun-ji remembered to tell the reporter that the Chinese name of the song he sang was "Labor Song", and mining and earning Bitcoins is also hard work. As a "return gift", the reporter taught Park Eun-ji a French proverb - "Deux précautions valentmieuxqu'une." (roughly meaning "It is always better to be extra careful"), which is called "Better safe than sorry" in Chinese.