Bitcoin suffers when it potentially disrupts the China Power and Money System

China is known for so much that has changed and many see China as the land of opportunity.  The latest adventure has been the use of Bitcoin.  It’s rise and fall. One way to look at China is as much as there is new there are some things that don’t change.  In China there are two fundamentals, Power and Money.  And, Money and Power.  To give you an idea of how power and money are different in China read this Economist article on how much richer the politicians are in China vs. the USA.

Power and money

Wealthy politicians

Sep 28th 2013 | From the print edition

Many Americans grumble about the wealth of their politicians, but they are paupers compared with their Chinese counterparts. The 50 richest members of America's Congress are worth $1.6 billion in all. In China, the wealthiest 50 delegates to the National People's Congress, the rubber-stamp parliament, control $94.7 billion. Darrell Issa, a Republican from California, is the richest man in Congress, with $355m. China's richest delegate is Zong Qinghou, boss of Hangzhou Wahaha Group, a drinks-maker, whose wealth is almost $19 billion (including assets distributed to family). Last year Mr Zong was China's richest man, but was overtaken by Wang Jianlin, who is not a member of the NPC. Wealth can bring problems wherever you are. On September 20th, a man, angry at being refused a job, attacked Mr Zong with a knife near his home in Hangzhou. Mr Zong survived, with nasty cuts to his hand.

On 11/24/2013 Forbes discusses how Bitcoin, Baidu, and Beijing are a triangle.

A China Triangle: Bitcoin, Baidu And Beijing

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Thinking of buying trinkets in Beijing?  Don’t forget to bring your Bitcoins. China, in the last few weeks, has gone crazy over the cryptocurrency, which is now accepted by Chinese online retailers, a Shanghai real estate developer,and traders in Tiananmen Square.  Perhaps you want a latte in Zhongguancun?  Yes, you can use Bitcoins to pay for caffeine in Beijing’s high-tech zone.

And less than two weeks later Baidu and Beijing shut down the use of Bitcoin.

China Slams Bitcoins: What's Next?

Chinese central bank prohibits the country's financial institutions from touching bitcoins, but plans regulation. Cue further trouble for the crypto-currency?

The value of bitcoins dropped 30% Thursday after the People's Bank of China and five other Chinese government ministries banned the country's financial institutions from handling the currency.

Why the sudden change?  Because Bitcoin changes the Money system in China which effects Power.  Those in power don’t like to see the money system changed in a way that could affect their power.

China's New East China Data Center has Local River as cooling Source

DatacenterDynamics has an article on a new East China Cloud Data Center.  Part of what is going on in China is the Cloud is being used to centralize the hosting of IT services.

Many domestic telecommunication players, large financial institutions and top 100 websites are also expected to use the Jiande cloud computing data center as a platform to enter into the cloud computing market and develop large high-end technology industry cluster.

When it is cold enough outside air will be used for cooling. When it gets too warm, then the river can be used as a cooling source.

General Manager of Zhejiang Yunkuaichuan Science and Technology CoHe Qing said the data center will draw on the nearby Xin’anjiang River’s constant water temperature - at about 17℃ year round - for cooling purposes.

When (the outside air) temperature is low, the data center can be partly or completely cooled by natural cooling, while the water in the cooling tower can be used as a cooling source; when (the outside air) temperature is above 15℃in wet-bulb temperature, the water of the Xin’anjiang River can be used as a cooling source.

Challenges of Doing Business in China, I wouldn't without Power and Money

I've had plenty of discussions on the subject of data center businesses going into China.  Scott Noteboom is the latest to make the announcement he'll go into emerging markets including China.  DCK covers the latest and Scott's statement he has the secret sauce to do business in China.

Noteboom believes he’s put together the connections and resources to make China more accessible. ”We believe that we will be the first provider to enable non-Chinese companies to smoothly deploy in China,” said Noteboom, who said he hopes to bring new data center technologies into China to realize exceptional efficiency and economics.

Noteboom isn;t supplying many details just yet. A key aspect of the plan will be site selection. Noteboom says LitBit hopes to identify the Asian equivalents of Quincy, Washington – previously unknown sites that provide exceptional economics and efficiency for data center operators.

My perspective on China is based on when I worked for Apple and Microsoft and would acquire power supplies and Simplified Chinese fonts. There are many meetings, negotiations and ongoing contract maintenance.  I've also known many people who have worked in China localizing Microsoft software or developing software in China.

Whenever someone in the data center industry says join me in working in China I say no thank you.

Here is a post that does a good job of explaining the challenges of doing business in China.  Five points are made.  #3 is the one that most don't know how to address.

Number three is kind of similar to number two. In China, there is always a story behind the story. There’s a person behind the person. It’s never what you see on the front end. It is partially related to cultural issues. For 5,000 years there has been this inside outside orientation to much of Chinese culture and as an outsider you are shown a certain view and as an insider you are shown a certain view. And there are various levels of being an insider or outsider. Again when you are trying to do business with a company or a person, you should find out where this person is from, where this company is from. What is their history? How did they become who they are today?  How did they get their money?  Who is behind them?  There is always someone sitting behind them, and not in a nefarious way. You are not talking to some puppet or shadow. There is just a level of complexity to Chinese business and to Chinese society that is important to take into account. We advise companies to never stop asking questions.

It will be interesting how LitBit does in China.  I helped out one friend who needed a resource that can address the above issue.  There aren't many.  You need a strategy and full time commitment to win in China, and even then you may lose.

Many people think China is new, but it is a country where Power and Money is in its DNA which by the way is not that much different than other countries.  It is just China has been at it for 5,000 years and it can be different than a Western approach.

Sometimes the Environmental Group is wired for damage control, example China's Hydropower

The majority of corporations environmental groups are part of a marketing organization.  This group can be used to coordinate the grass roots efforts in the company as employees are passionate about making a difference in the world beyond just shipping their services.

Here is an example at eBay Green. https://twitter.com/eBayGreen

eBay Green

eBay Green

@eBayGreen

Join us to help the world buy, sell and think green every day!

green.ebay.com

 

 

But, sometimes the green efforts are primarily wired for damage control.  An example is here in this Economist article on China's hydroelectric dams.

Yet it does not matter how strong the case may be against Xiaonanhai, because the battle against a hydropower scheme in China is usually lost before it is fought. The political economy of dam-building is rigged. Though the Chinese authorities have made much progress in evaluating the social and environmental impact of dams, the emphasis is still on building them, even when mitigating the damage would be hard. Critics have called it the “hydro-industrial complex”: China has armies of water engineers (including Hu Jintao, the former president) and at least 300 gigawatts of untapped hydroelectric potential. China’s total generating capacity in 2012 was 1,145GW, of which 758GW came from coal-burning plants.

...

There is also a political reason why large hydro schemes continue to go ahead. Dambuilders and local governments have almost unlimited power to plan and approve projects, whereas environmental officials have almost no power to stop them.

Here is where damage control is used.

Environmental officials who have not been financially captured by the dambuilding economy find themselves as scarce as some of the fish they are charged to protect. Environmental activists, meanwhile, can request access to public records and demand public hearings, both required by law. But they say that these avenues are barred when they are most needed—on controversial projects that face vocal opposition. For example, the authorities have rejected requests for public records on Xiaonanhai and they have not granted a public hearing.

This is something I learned over 5 years ago when watching how one corporation had its environmental group set up, and I knew it was not really that interesting to me as they were like a faux green effort.

Coal Pollution is projected to cut 5.5 yrs off of 5mil Chinese People

WashingtonPost covers a study that says coal pollution in China will cut 5.5 years off of 5 million people.

What they found was surprising. Concentrations of “total suspended particulates” were about 55 percent higher in the north, thanks to the heavy coal burning. And life expectancy for those living in the north was also about 5.5 years shorter — an effect due entirely to differences in cardio-respiratory problems, which is exactly what you’d expect if pollution was the cause. (There’s a long appendix detailing all the different controls they applied.)

...

The study concluded that nearly 500 million people living north of the Huai River will lose an estimated 2.5 billion life years because of pollution from widespread coal burning, compared with those south of the river. The study is based on analyses of health and air-quality data from 1981 to 2000.

The study is here.

Abstract

This paper's findings suggest that an arbitrary Chinese policy that greatly increases total suspended particulates (TSPs) air pollution is causing the 500 million residents of Northern China to lose more than 2.5 billion life years of life expectancy. The quasi-experimental empirical approach is based on China’s Huai River policy, which provided free winter heating via the provision of coal for boilers in cities north of the Huai River but denied heat to the south. Using a regression discontinuity design based on distance from the Huai River, we find that ambient concentrations of TSPs are about 184 μg/m3 [95% confidence interval (CI): 61, 307] or 55% higher in the north. Further, the results indicate that life expectancies are about 5.5 y (95% CI: 0.8, 10.2) lower in the north owing to an increased incidence of cardiorespiratory mortality. More generally, the analysis suggests that long-term exposure to an additional 100 μg/m3 of TSPs is associated with a reduction in life expectancy at birth of about 3.0 y (95% CI: 0.4, 5.6).

Wow.  2.5 billion life years vs. coal power.  Could you imagine if you were told given where you live you'll die 5.5 years earlier than others in a lower carbon region?