Beijing Business News: The regulatory storm, the mining circle “cool” intention at first sight

The regulation is set, the local crackdown, the current big action mining in the country is already difficult.

Beijing Business News: The regulatory storm, the mining circle "cool" intention at first sight

“Strengthen the supervision of financial activities of platform enterprises, crack down on bitcoin mining and trading, and resolutely prevent the transmission of individual risks to the social sector. ……” The latest key deployment of the financial sector by the Financial Stability Development Committee of the State Council (hereinafter referred to as “FSC”) has made the mining circle tremble three times.

The mining circle agencies panic
A stone has stirred up a thousand layers of waves.

Since the Financial Committee set the tone on the night of May 21, the first stimulus was the price of coins, and Beijing Business News reporter noticed that the virtual currency fell collectively that night, bitcoin fell $3,000 in the short term, and ethereum fell over 13.76% during the day. And the next few days, the price of coins is open to “falling” mode, as of May 24 zero, bitcoin fell below $ 30,000, for the first time since January 5, fell more than 16% in 24 hours.

This was followed by a plunge in the share prices of several miners. Beijing Business News reporter noted that the day of the regulatory voice, the first organizations to be affected by the mining machine manufacturers, including the shares of listed companies such as Jia Nan Technology and Yibang International have fallen following the price of the currency, the latest day fell 9.23%, 7.69%, respectively.

In fact, in addition to the pressure on the stock price, the plummeting business volume and shortage of funds is a bigger test for the miners,” a mining industry practitioner told Beijing Business News on May 24, “Jia Nan Technology and Yibang International, which have been successfully listed, can rely on the secondary market for funds despite the plummeting stock price, while other miners who have been seeking to go public but have not yet done so, have actually been suffering from internal cash flow constraints. The other miners who have been seeking to go public but have not yet done so have actually experienced internal cash flow shortages”. The source also revealed to Beijing Business News that a head miner, which had previously been relying on high prices to sell futures to ease cash flow problems, will undoubtedly have a huge impact on its business under this regulatory order.

For a number of issues such as share price and business impact, the Beijing Business News reporter spoke to a number of head miners such as Jia Nan Technology, Yibang International and Bitmain, of which Yibang International was contacted several times without success, and no further response was received from Bitmain as of press time, while Jia Nan Technology responded that “it is not convenient to comment on the policy at this time, and will only have a clearer view when specific policy details are available”.

The company is still in a wait-and-see situation, but for conservative reasons, it has already taken down some of the Bitcoin and Ether mining machine sales channels.

“The regulation has a great impact on the business, users are afraid to buy mining machines, they were too busy before, but since the new round of regulation, it is difficult to sign orders for mining machine sales.” Li Ming told Beijing Business News that as the company had previously prepared hard drives, graphics cards and also chips, etc., the inventory backlog, sales took a sharp turn for the worse, on the one hand, the business volume is under pressure, on the other hand, the pressure of capital flow is also great. What is more difficult is that the next period of time, mining machine sales will be more difficult.

In addition to wait and see, there is also a flight. May 24, Beijing Business News reporter learned from a number of industry insiders, regulation set, local crackdown, the current big action in the domestic mining is already difficult. One of the industry sources told reporters that at present, especially in Inner Mongolia, the mining situation is very serious, reported a lot of cases, many large mining sites some choose to hide in Xinjiang, Qinghai, Sichuan, Guizhou and other places in some deep forests, mining environment is extremely harsh; there are also some mining sites are being expedited to transfer abroad, mostly to Central Asia and North America.

But the transfer is also facing multiple risks. The aforementioned industry insiders said, one is the cost issue, a wide range of migration may lead to damage to equipment; in addition, hosting overseas in addition to increasing costs, security will also be lower than the domestic, there is the risk of loss of mining machines as well as disconnected power, the overall view is not as stable as the domestic come.

On May 24, Beijing Business News reporter learned from FireCoin that FireCoin Mall decided to suspend the sale of mining machines and derivative services for users in mainland China. The company has suspended the provision of hosting services for users who have purchased BTC mining products (including “mining machine + hosting”, “one-stop” and “worry-free mining”), and the relevant machines are offline. The person in charge of FireCoin told reporters, “The pace of globalization of the mining mall business is increasing, this move is mainly to focus on expanding overseas business, the mining mall decided to suspend the relevant services for users in mainland China. The solution to the mining machines held by the old users will be notified to the customers later”.

In response to the latest initiatives of OKEx, Coinan and other exchanges, Beijing Business News reporter also conducted an interview, in which OKEx responded that “we have not yet received a notice from the relevant units, but will respond positively to cooperate with the work of regulatory units”. And as of press time, the reporter has not received a response from Coinan.

There are still headwind miners
The mining circle, which was so hot a few days ago, is still “cool”.

Some people wonder why the mining circle is cool when they say it’s cool. Is there a turnaround?

In this regard, Jiang Zhaosheng, research director of Zero One Blockchain and researcher of Digital Asset Research Institute, told Beijing Business News that the latest regulatory action is actually a continuation and strengthening of the previous regulation of China’s virtual currency. On the one hand, due to the frenzied market of the cryptocurrency circle in the previous period, a large number of bubbles were accumulated, and a large number of investors from traditional markets participated in the cryptocurrency circle under the influence of the so-called “wealth creation myth”, which caused the rapid spread of related risks, and may even endanger economic and social security; on the other hand, due to the hot market, the mining industry was also favored, but this On the other hand, due to the hot market, the mining industry is also popular, but this is contrary to the goal of carbon peaking and carbon neutrality set by China, so it has triggered this series of regulatory actions.

In Jiang Zhaosheng’s view, the latest regulation will largely exclude mining pools, mining farms and other specialized and agglomerated mining circle businesses from the territory of mainland China, and therefore will also make it difficult for mining machine manufacturers previously based in the Chinese market to subsequently conduct business in China. From a comprehensive perspective, the latest regulatory voices may force the mining circle market to spontaneously complete the process of “de-Chineseization”, and the previous concentration of Chinese mining computing power may gradually disappear.

However, despite the overall “ebb”, the Beijing Business News reporter found that there are still many individuals and businesses still addicted to the “mining business”.

One part is the Internet cafe operators. Some Internet cafe operators use computers equipped with high-performance graphics cards to mine and speculate on coins at the same time. One of them revealed that the Internet cafe he operates has a total of 60 computers, and as of May 21, a total of 20 ethereum have been mined, and the value of mining has far exceeded the business income of the Internet cafe; part of them is the business of graphics card and hard disk. The company’s business has been affected by the regulatory crackdown, and the volume of sales has been much lower than before, so he began to study mining and speculation on his own, and is also planning to wait for the bottoming operation after the price of coins falls further.

“At present, multi-location regulation is mainly concerned about large-volume cluster mining companies, which also find room for retail investors to survive mining because of their small volume and stealth, but these businesses are also violations.” A senior industry analyst said.

Jiang Zhaosheng likewise told Beijing Business News that whether there is risk in individual mining behavior depends mainly on the specific measures taken by the relevant departments and regional regulators in terms of implementation. Previously, mining was cracked down more because of electricity theft and illegal fund-raising, and individual mining itself was not banned, but a “one-size-fits-all” total ban was not ruled out.

Legal risks are high
In fact, the FSC’s “crackdown on bitcoin mining and trading” deployment is in line with the previous regulatory tone.

As early as January 2018, the Office of the Leading Group for the Special Rectification of Internet Financial Risks issued a document requesting local governments to guide the orderly withdrawal of mining enterprises in their jurisdictions. In addition, because of the “high energy consumption” problem, at the end of February 2021, the Development and Reform Commission of Inner Mongolia Autonomous Region issued a document saying that it plans to comprehensively clean up and shut down virtual currency mining projects, and withdraw all of them by the end of April, and strictly prohibit new virtual currency mining projects. On May 18, the Development and Reform Commission of Inner Mongolia Autonomous Region again issued a notice on accepting reports on virtual currency mining enterprises, cracking down on enterprises that provide services such as venue leasing for virtual currency mining enterprises.

In the opinion of Xiao Za, director of the China Banking Law Association, from the hot situation of participation in mining, it can be predicted that the people who bought the mining machine can not be easily discarded, and continue to move into the “underground” mining should be a lot of people. But to continue mining, you also need to pay attention to multiple legal risks.

Xiao Za told Beijing Business News that in the past judicial practice, the courts often identified the digital tokens mined by mining machines, especially non-mainstream virtual currencies, as “prohibited objects” and refused to protect the interests of the parties, and some courts even suggested that the parties report the case. After the “crackdown on bitcoin mining” signal is sent, it is more likely that the mining machines will be declared by the courts as prohibited items and refused legal protection, and the civil rights and interests of the miners will not be protected by Chinese law. In addition, if subsequent laws and administrative regulations are introduced to follow the spirit of the meeting and explicitly prohibit virtual currency mining, miners may be directly suspected of administrative violations or even illegal business crimes.

In addition, the fact that practitioners have moved their business overseas does not mean that they can rest easy. Xiao Zha further pointed out that even if the main body of the practitioner, business transferred to a foreign country, but as long as its market subject has Chinese people, and the property of Chinese people suffered losses, China can be “the location of the information network system used by the victim,” “the location of the victim was infringed “The public security judicial organs of China can still have jurisdiction over the criminal acts of the practitioners.

However, in Jiang Zhaosheng’s opinion, the subsequent domestic mining circle enterprises will accelerate the globalization layout, North America, Europe, Central Asia and other regions as well as countries that have accepted the mining behavior, will become the business launch point of mining circle enterprises. As long as the cryptocurrency ring is still around, the virtual currency market such as bitcoin cannot be completely banned. But this Chinese regulatory action will certainly have a profound impact on the mining community.

“Continued crypto token mining will continue to be antagonistic to the law, not only in our country, but the cautious attitude of countries towards digital tokens will be reflected in all aspects, and as virtual coins erode fiat money and financial security, laws and law enforcement in various countries will only tighten.” Xiao Sa said.

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