Bitcoin has also entered the "Made in China" era and now the electricity cost of producing one coin is as high as 10,000 yuan!

In the Bitcoin industry, in addition to investors who buy and sell Bitcoin in the trading market, there is another group of people called miners. They are like the gold diggers 100 years ago, digging and creating Bitcoin. The unbearable roar of the machines sounds like gold to the miners.

After five years of hard work, China's computing power has accounted for more than 75% of the world's total, which means that 75% of the world's bitcoins are made in China. In 2014, 500,000 yuan of electricity was used to produce 100 bitcoins per day, and the electricity cost alone was 5,000 yuan per bitcoin. Now, the same cost has more than doubled, and the electricity cost per bitcoin is as high as 10,000 yuan.

Recently, a computer virus called Wannacry swept the world, infecting many computers around the world. According to the hacker's request, if you want to unlock the computer files, you have to pay Bitcoin equivalent to $300. So why does the ransomware virus only have a special liking for Bitcoin?

Ransomware attacks worldwide, with the UK, US and Russia most affected

Wencai is a graduate student. On May 12, he was working in the laboratory as usual. When he turned on the laboratory computer, he saw the hacker's ransomware interface, which stated that if the ransom was not paid, the file would not be able to be opened. This was the WannaCry ransomware virus that swept the world.

Wencai, a graduate student at the school: There were only two computers with Windows 7 installed in the room (laboratory), and both of them were infected. At that time, I immediately thought that I should check whether my important data and important information were lost, and then I found that some of the information had indeed been encrypted. It was quite urgent at that time, so I immediately disconnected from the Internet and unplugged the network cable.

The computers in Wencai's lab were not an isolated case. On the night of May 12, the computers of many of Wencai's classmates were attacked. He showed the reporter his circle of friends at the time, which was already flooded with the virus incident.

Graduate student Wencai: Students whose computers are infected are still very nervous about their data. We have some important research results, and if we need to replicate them, we may have to spend another half a month.

Bitcoin becomes the first choice for ransomware, hackers take the opportunity to hype up Bitcoin prices

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All computers attacked by the ransomware will receive a ransom letter, informing the infected user that all files will be encrypted and locked unless they pay $300 worth of Bitcoin within a specified time. If the payment is overdue, the amount will be doubled. If the user chooses to refuse, the files in the computer may be completely cleared. Therefore, some people call this virus "Bitcoin ransomware."

In 2008, someone used the pseudonym Satoshi Nakamoto to outline the concept of Bitcoin on the Internet, which was to create an electronic currency that did not require approval and that everyone had the right to issue. In 2009, based on this concept, Satoshi Nakamoto established an open source project and officially announced the birth of Bitcoin, the Internet currency.

Long Hai, security expert at Tencent Security Anti-Virus Lab: Bitcoin is a virtual currency on the Internet. It is not easy to track, is not controlled, and has strong anonymity. So even if you pay with Bitcoin, it is difficult for us to track who you paid to.

It is precisely because of the anonymity, virtuality and untraceability of Bitcoin that the creators of this Bitcoin ransomware virus also chose it as a means of transaction. Not only in this ransomware incident, Bitcoin has also been used by many criminals to try to escape the financial supervision of various governments.

Bitcoin prices fluctuate wildly, unable to be valued, and are sold at high prices

Xu Mingxing, the founder of the Bitcoin trading platform, has been engaged in Bitcoin trading since 2013 and has witnessed more and more people joining the ranks of Bitcoin investment. From 2013 to 2017, within four years, their platform has grown from hundreds of thousands of users to the current 1 million users.

Xu Mingxing, founder of OKCoin Bitcoin trading platform: We estimate that the number of Bitcoin users in China may increase from hundreds of thousands to millions. As for foreign countries, the number of Bitcoin users in the US and European markets has increased significantly.

Deng Rushuai is a senior investor in the Bitcoin industry. In the seven years that Deng Rushuai has invested in Bitcoin, he has experienced four major ups and downs. Compared with stock fluctuations, the price changes of Bitcoin can be described as a roller coaster.

Bitcoin investor Deng Rushuai: Bitcoin is more risky because it is difficult to accurately estimate Bitcoin. When we invest in stocks, we like to value listed companies based on their industry and growth potential, but Bitcoin cannot be valued.

On May 12, when the ransomware virus broke out, the price of Bitcoin soared, with the price of Bitcoin traded in the Chinese, American and Japanese markets exceeding RMB 10,000. In January this year, the lowest price of Bitcoin was less than RMB 5,000.

Bitcoin investor Deng Rushuai: When I entered the market, the cost was about 5 to 10 US dollars per Bitcoin. Later, we experienced a rise to more than 30 US dollars, and then fell to 2 US dollars. Then the highest point of 2 US dollars was more than 1,300 US dollars in 2013. Then it fell back to more than 100 US dollars. Now it has risen to about 1,500 US dollars.

Although this ransomware incident has greatly increased the exposure of Bitcoin and its price has risen in the short term, he still chose to sell part of his Bitcoin holdings.

Bitcoin investor Deng Rushuai: Actually, I sold some of my bitcoins yesterday (May 15). In the long run, if you go too far, you may be suppressed by the government. If this happens, it will also be bad news in the short term.

70% of the world's bitcoins are produced in China; costs have doubled and external shocks have increased significantly

Screenshot of CCTV Finance

Screenshot of CCTV Finance

In the Bitcoin industry, in addition to investors who buy and sell Bitcoin in the trading market, there is another group of people called miners. They are like the gold diggers 100 years ago, digging and creating Bitcoin. The unbearable roar of the machines sounds like gold to the miners.

Guo Hongcai has been following Bitcoin for five years. He has evolved from an initial Bitcoin enthusiast to a practitioner in the industry. In 2014, he once owned the world's largest Bitcoin mine.

Guo Hongcai, Bitcoin investor: I started investing in Bitcoin mining in 2014. We built the world's largest Bitcoin mining farm in Inner Mongolia at that time. Chinese miners work very hard. After five years of hard work, China's computing power has accounted for more than 75% of the world's total, which means that 75% of the world's Bitcoins are produced by Chinese people.

These seemingly inconspicuous machines in the mine are called Bitcoin mining machines. According to the design of Satoshi Nakamoto, the founder of Bitcoin, users can perform a large number of calculations according to the prescribed algorithm to obtain data that meets the requirements, and then they will receive a certain amount of Bitcoin as a reward. This process is called "mining", and the machine that can perform this high-speed calculation is a mining machine. In the eyes of many Bitcoin players, this process is a process of creating wealth.

Deng Rushuai, a Bitcoin investor: In the early days, I bought some top-notch graphics cards and mined at home because the cost of mining was lower. That’s how I got involved. I don’t mine now because mining is very difficult now. You need a very professional mining farm, not a mining machine, to get a clear return, and the investment is relatively large.

Deng Rushuai also bought equipment to mine by himself, but he no longer does this. According to Satoshi Nakamoto's idea, the total amount of Bitcoin is 21 million. As time goes by, the number of Bitcoins produced will decrease. In addition, as more and more people start mining, the difficulty of obtaining Bitcoin has greatly increased.

Guo Hongcai, an investor in Bitcoin: From a distance, the mining farm looks like a chicken farm, and it is full of Bitcoin mining machines. We consume about RMB 500,000 in electricity every day, and at that time (2014), we could produce 100 Bitcoins.

Guo Hongcai's mine is already using the seventh generation of mining machines. The cost of mining is getting higher and higher, and the returns are getting lower and lower. Even he, who once owned the world's largest mine, is gradually giving up mining.

Guo Hongcai, an investor of Bitcoin: However, as the difficulty of mining Bitcoin increases, people from all over the world are moving to China, and China's computing power is increasing. The computing power of the world has now increased more than tenfold, and our daily output is becoming less and less, and now it is less than 50 Bitcoins per day.

In 2014, 500,000 yuan of electricity was used to produce 100 bitcoins per day, and the electricity cost alone was 5,000 yuan per bitcoin. Now, the same cost has more than doubled, and the electricity cost per bitcoin is as high as 10,000 yuan. In addition, there are many kinds of virtual currencies on the market. In addition to Bitcoin, there are also Litecoin, Ethereum, Ruitai Coin, etc., which are all produced by a certain specific algorithm, which may also affect the price of Bitcoin.

Bitcoin price is more expensive than gold, central bank warns of speculation

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According to the London gold market quotation, the recent gold price is $1,258 per ounce. The price of Bitcoin is over $1,660, 30% higher than the price of one ounce of gold. So far, more than 15 million Bitcoins have been mined worldwide. Calculated at $1,660 per coin, the total value of Bitcoin has exceeded $24 billion.

Some countries and regions have adopted a more friendly attitude towards Bitcoin. For example, the European Court of Justice ruled in 2015 that transactions of Bitcoin and other virtual currencies will be exempt from VAT. The German Ministry of Finance issued a statement in 2013 that Bitcoin is a financial instrument under the German banking regulations. It is closer to "private currency" and can be used for multilateral settlement. In September 2015, the Belgian Ministry of Finance officially announced that all virtual currency transactions in the country will be exempt from VAT.

Xu Mingxing, founder of OKCoin Bitcoin trading platform: Since Bitcoin entered the mainstream in 2013, countries around the world have regulated it to varying degrees. The United States has included Bitcoin in the category of securities and commodities.

However, some countries have also adopted laws prohibiting Bitcoin. In Russia, the use of Bitcoin is illegal, and using Bitcoin may result in a four-year prison sentence. The Thai government officially declared virtual currency illegal in 2013. In China, in 2013, the People's Bank of China and five other ministries jointly issued the "Notice on Preventing Bitcoin Risks", requiring all financial institutions and payment institutions not to conduct Bitcoin-related businesses, and reminding the public not to participate in speculation. In January this year, the central bank interviewed domestic virtual currency trading platforms, shut down leveraged financing businesses, began to collect transaction fees, and once again issued a warning to investors about Bitcoin investment.