BITCOIN MAXIMALIST on Twitter: “Dumping #Bitcoin miners: China hasn’t made such a colossal mistake in 500 yrs since the time they burned their world dominating fleet of ships. https://t.co/ARWDomBipk” / Twitter
500 years ago, China destroyed its world-dominating navy because its political elite was afraid of free trade
Sunday 05 March 2017 14:14
In the 1400s, China owned the greatest seagoing fleet in the world, up to 3,500 ships at its peak. (The U.S. Navy today has only 430). Some of them were five times the size of the ships being built in Europe at the time.
But by 1525, all of China’s “Treasure Fleet” ships had been destroyed — burned in their docks or left to rot by the government. China had been poised to circumnavigate the globe decades before the Europeans did, but instead the Ming Dynasty retracted into itself and entered a 200-year-long slump.
Few people in the West realise how economically and technologically advanced China was by the 1400s. The Treasure Fleet was vast — some vessels were up to 120 metres long. (Christopher Columbus’s Santa Maria was only 19 metres.) A Chinese ship might have several decks inside it, up to nine masts, twelve sails, and contain luxurious staterooms and balconies, with a crew of up to 1,500, according to one description. On one journey, 317 of these ships set sail at once.
Under the command of the eunuch admiral Zheng He, the Chinese were routinely sailing to Africa and back decades before Columbus was even born. Yet they did not go on to conquer the world. Instead, the Chinese decided to destroy their boats and stop sailing West.
In the 1470s the government destroyed Zheng’s records so that his expeditions could not be repeated. And by 1525 all the ships in the Treasure Fleet were gone.
Historians have a variety of explanations. The Yongle Emperor was distracted by a land war against the Mongols, a conflict in which the navy was irrelevant, for instance. Others argue that the vast cost of the Treasure Fleet’s expeditions far outweighed the actual treasure they came back with.
But Angus Deaton, the Nobel Prize-winning Princeton economist, prefers a different theory. In his book “The Great Escape: Health, Wealth, and the Origins of Inequality,” he argues that the Chinese burned their boats (almost literally) in an attempt to control foreign trade.
The Treasure Fleet was abandoned at the urging of the political elite inside the Emperor’s civil service who had become alarmed at the rise of a newly rich merchant class. “The emperors of China, worried about threats to their power from merchants, banned oceangoing voyages in 1430, so that Admiral Zheng He’s explorations were an end, not a beginning,” Deaton writes.
China retracted into itself and the industrial revolution sprouted first in Western Europe, three centuries later. China’s influence on the world got smaller until the 1600s. And only in the last 10 years or so has China fully caught up with the West.
Over coffee at the World Economic Forum in Davos this year, I asked Deaton if he thought the Treasure Fleet story was newly relevant, given the sudden desire in the US and the UK to withdraw from international free trade agreements in favour of protectionist policies. I also wanted to know whether he thought the fear of trade might also be a function of increasing inequality in the West. When society becomes extremely unequal, elites tend to gain enough power to use the government to secure artificial advantages that shield them from competition.
In other words, are we looking at another Treasure Fleet moment right now, and failing to see the danger of elite-driven rentier mercantilism?
“A lot of inequality comes from that sort of rent-seeking, you know, from going to Washington and saying ‘protect my industry, or let me charge whatever I want for pharmaceutical prices, and pass a law which says that everything that’s approved by the FDA must be covered by government health schemes,’ and that’s basically legalised theft,” Deaton said.
“So you’ve got a big number of people in banks, pharmaceutical companies, the military, and so on in the US who are getting fabulously rich by stealing stuff essentially, and I think that pisses off [people].”
“The bank bailout gave hundreds of billions of public money to people who were already probably the richest people the planet has ever seen, right? Now it doesn’t make you ‘deplorable’ if you resent that. I think that’s the truth of where inequality is really hurting us. These people are being rewarded for hurting us.”
OK, so tracing a direct link from the Treasure Fleet of the 1400s to Trump and Brexit might be a stretch.
But it’s more than a little ironic that 500 years after Zhenge He set sail, the Chinese empire is now begging the West to keep trade routes open. The West, meanwhile, wants to put up new barriers. At the same time as Deaton and I discussed the fate of the Treasure Fleet, Chinese president Xi Jinping went on stage at Davos to castigate Trump and the US for being scared of international trade. He used nautical terms to do so:
“If one is always afraid of the sea he will get drowned in the ocean sooner or later. So what China did was to take a brave step forward and embrace the market. We have had our fair share of choking in the water and we have encountered choppy waves. But we have learned how to swim in this process. It has been the right strategic choice … whether you like it or not the global market is the big ocean you cannot escape from,” Xi said.
No doubt Admiral Zhenge He would have approved.
This is an opinion column. The thoughts expressed are those of the author.
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Read the original article on Business Insider UK. © 2016. Follow Business Insider UK on Twitter.
Why China’s bitcoin miners are moving to Texas
7 days ago
By Zhaoyin Feng
BBC News, Washington
China’s ban on cryptocurrency mining has forced bitcoin entrepreneurs to flee overseas. Many are heading to Texas, which is quickly becoming the next global cryptocurrency capital.
When China announced a crackdown on bitcoin mining and trading in May, Kevin Pan, CEO of Chinese cryptocurrency mining company Poolin, got on a flight the next day to leave the country.
“We decided to move out, once [and] for all. [We’ll] never come back again,” Mr Pan told the BBC.
Headquartered in Hong Kong, Poolin is the second largest bitcoin mining network in the world, with most of its operations in mainland China. The country was home to around 70% of global bitcoin mining power, until the clampdown sent the price of bitcoin into a tailspin and caught miners off guard.
Now China’s “bitcoin refugees” are urgently scrambling to find a new home, whether in neighbouring Kazakhstan, Russia or North America, because for bitcoin miners, time is literally money.
“We had to find a new location for the [bitcoin mining] machines,” Poolin’s vice-president Alejandro De La Torres said. “Because every minute that the machine is not on, it’s not making money.”
In what some call the “Great Mining Migration,” the Poolin executives are among the many bitcoin miners who have recently landed in a place reputed as part of America’s wild wild west: Austin, Texas.
Bitcoins are a digital currency with no physical form – they exist and are exchanged only online.
They are created when a computer ‘mines’ the money by solving a complex set of maths problems and that is how bitcoin ‘miners’ who run the computers earn the currency.
This takes a lot of energy.
As a new form of money that transcends national boundaries, there is also much confusion and potential to run afoul of government rules – so two things bitcoin entrepreneurs value are cheap electricity and a relaxed regulatory environment.
The Lone Star State fits the bill to a tee.
New frontier for bitcoin mining
For Mr Pan, Texas felt like home almost instantly. Days after his arrival, he was gifted an AR-15 rifle, which he says he may use to “hunt hogs from a helicopter” one day.
While the shooting ranges and Texas barbeque provide for welcome entertainment, legal protection for business is the major attraction for the bitcoin miners. “What happened to us in China won’t happen in the US,” Mr De La Torre says.
Alejandro De La TorreKevin Pan (left) and Alejandro De La Torre
Governor of Texas Greg Abbott has been a vocal supporter for cryptocurrency. “It’s happening! Texas will be the crypto leader,” he tweeted in June. In the same month, the Lone Star State became the second US state after Wyoming to recognise blockchain and cryptocurrency in its commercial law, paving the way for crypto businesses to operate in the state.
Many Chinese bitcoin companies have looked to Texas for stability and opportunity. Shenzhen-based firm BIT Mining has planned to invest $26 million to build a data centre in the state, while Beijing-based Bitmain is expanding its facility in Rockdale, Texas. This small town with around 5,600 residents once housed one of the world’s largest aluminium plants, and now it’s emerging as the next global hub for bitcoin mining.
There might be another underlying connection between the industry and the state, as De La Torre says that bitcoiners and Texans share the same values. “Texans take their freedom and rights very seriously, and so do we bitcoiners.”
Experts believe China’s bitcoin crackdown was motivated by having greater control over the financial markets, and it may become a boon for America.
“The migration benefits the US in terms of talent acquisition and furthering the innovation ecosystem,” says Kevin Desouza, a business professor at the Queensland University of Technology who has done research on China’s digital currency policy. In return, the bitcoin miners get access to a thriving and innovative community, as well as more diverse sources of capital, according to Prof Desouza.
The Washington Post via Getty ImagesChina was once the world’s centre of bitcoin mining
Energy and political risks
Other than a stable regulatory environment, the energy-hungry industry is hunting for cheap electricity in Texas.
Texas has some of the cheapest energy prices in the world, due to its deregulated power grid. Consumers enjoy more choices of electricity providers, which encourage providers to lower prices to stay competitive. During peaks of electricity demand, bitcoin farms can even sell unused power back to the grid.
Although El Salvador is set to become the first country to adopt bitcoin as a national currency, bitcoin miners prefer the US because of its well-developed electrical infrastructure, says Mr De La Torre.
But some analysts warn that the “Great Mining Migration” may lead to serious repercussions, as cities and towns struggle to meet the huge energy appetite.
In February, blackouts following a deadly snowstorm left millions of homes and businesses in Texas without power for days. More than 200 people died. During the power outage, bitcoin farms were compensated to stay offline. Is Bitcoin bad for the environment?
The increased scrutiny of Chinese companies in America may also lead to more attention on these mining newcomers. Texas recently passed a law that prevents “hostile foreign actors” from accessing critical infrastructure, including its power grid. The new law was reportedly prompted by a Chinese billionaire’s plan to build a wind farm in southwest Texas. Critics allege that the project could be used to hack into the Texas energy grid and to gather intelligence from a nearby US military base.
Prof Desouza says that while access to electricity grids is unlikely to be an issue for bitcoin miners in the short term, political risk will continue to evolve.
The bitcoin miners do miss something in China – cheap labour cost and speedy construction.
According to Mr Pan, while a new bitcoin farm takes up to five months to build in China, it could take as long as 18 months in Texas. Global shipping prices have also skyrocketed during the pandemic, making it significantly more expensive to ship mining machines from China to the US.
Despite the costly and time-consuming efforts, Mr Pan says his company is committed to settle in Texas, “It’s a free land, and a lot of bitcoiners are here,” he says, “so we feel: ‘whoa, family reunion.'”
Whole new meaning to the Matricks!
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1421: The Year China Discovered the World
Published by Bantam Press, London https://www.gavinmenzies.net/china/book-1421/
“…On the 8th of March, 1421, the largest fleet the world had ever seen sailed from its base in China. The ships, huge junks nearly five hundred feet long and built from the finest teak, were under the command of Emperor Zhu Di’s loyal eunuch admirals. Their mission was ‘to proceed all the way to the end of the earth to collect tribute from the barbarians beyond the seas’ and unite the whole world in Confucian harmony. The journey would last over two years and circle the globe.
When they returned Zhu Di lost control and China was beginning its long, self-imposed isolation from the world it had so recently embraced. The great ships rotted at their moorings and the records of their journeys were destroyed. Lost was the knowledge that Chinese ships had reached America seventy years before Columbus and circumnavigated the globe a century before Magellan. They had also discovered Antarctica, reached Australia three hundred and fifty years before Cook and solved the problem of longitude three hundred years before the Europeans…”