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Saturday, December 8, 2018

Chinese miners may be behind latest Bitcoin selloff...

Speaking with one of my sources when it comes to stories involving China, he mentioned how surprised he was that so many people he knew in China were selling Bitcoin they earned by mining at it's current bear market prices.  While one source wasn't enough information to come to any solid conclusion, Chinese based news outlets are also now sharing similar information.

Professionally, my source is a Chinese coder/engineer working on non-cryptocurrency related blockchain projects, but also runs a couple mining rigs in his spare time.  He's also a member of several popular online communities where Chinese-based Bitcoin miners connect with each other and share their thoughts.  He explained the current sentiment:

"Currently in the (Chinese miner) forums it's an endless argument between the more experienced miners calling people crazy for selling Bitcoin while the price is so low, insisting they'll regret it soon, and the newer miners basically saying they don't have a choice.  The newer miners bought all this hardware in 2017 just to have the markets turn bear shortly after."

It appears miners that began in 2016 or earlier have one mentality - HODL, and your patience will pay off in the long run.

But for miners that began during the 2017 boom, the mentality is different - often out of necessity. They simply can't afford to operate and not sell any of their Bitcoin.

One miner speaking to a Chinese-language news publication yesterday explained:

"Everyone is short-seller, we do this for self-defense but that will lead to a further decline in cryptocurrency price… Without short selling, we will be eliminated ultimately, but if everybody keeps doing this, we will finally die together, which is quite heroic” 

It's not just the tokens they're selling either, miners are selling their rigs too.  China based tech liquidation services have had a recent influx of mining rigs, some mining operations are just downsizing during the bear market and say they'll re-purchase the hardware when things turn around.

While the newer miners struggle, general outlook isn't all doom and gloom.

"The blockchain industry has flushed out some poor-quality projects, and the entry barrier to the industry has increased, which is beneficial to the sector's future growth. Solid public blockchain projects and numerous popular decentralized apps are gaining momentum. Chinese enterprises and conglomerates continue to explore new blockchain use cases." the CEO of Huobi China recently told Forbes.
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Author: Adam Lee 
Asia News Desk