From “De-Chineseization of Transactions” to “De-Chineseization of Computing Power” Where does the cryptocurrency mining industry go from here?

Will virtual currencies finally go to zero?

From "De-Chineseization of Transactions" to "De-Chineseization of Computing Power" Where does the cryptocurrency mining industry go from here?

2021 was a tough year for retail investors, and in May, bitcoin, which had been riding high this year, collapsed.

This was followed by the introduction of policies, and for the first time, the central government explicitly proposed a “rectification” of bitcoin mining. Bitcoin and cryptocurrencies were in a downward spiral.

On May 14, State Grid Sichuan Aba Prefecture Electric Power Co., Ltd. also issued a power outage notice.

On May 19, Inner Mongolia Development and Reform Commission personnel said they would continue to regulate virtual currency mining in the future.

On May 21, the Finance Commission explicitly cracked down on bitcoin mining and trading practices.

On May 25, the Development and Reform Commission of Inner Mongolia Autonomous Region issued a draft of “Eight Measures to Resolutely Combat and Discipline Virtual Currency Mining” for public comment.

On May 26, the National Development and Reform Commission issued the implementation plan for the Arithmetic Hub.

On June 2, the Sichuan Regulatory Office of the National Energy Administration will hold a small-scale research symposium.

On May 27, the National Development and Reform Commission issued the “Implementation Plan for the Arithmetic Hub of the National Integrated Big Data Center Collaborative Innovation System”, which stated that it would lay out the national arithmetic hub nodes, implement the “East Data West Arithmetic” project, and build a new data flow-oriented arithmetic hub. The new data flow-oriented arithmetic network pattern. In this round of policy, it is easy to see that the state has a two-pronged approach to carbon neutrality and computing power layout.

Bitcoin miners who have been quietly mining in remote areas of China may not have expected that they would be the first to be hit by financial regulation. Under high regulatory pressure, going offshore? Retreat? This is a collective dilemma for the mining community.

Miners on the sidelines
“It is the consensus of the industry that the mining industry is moving overseas. It used to be in areas where electricity prices were super low. But after encountering policy risks in places like Iran, the main flow is to North America, where policy and energy are relatively stable these days. Liu Changyong said.

After the five ministries issued the “94” document in 2017, most domestic exchanges were shut down and began to look for overseas development opportunities. Liu Changyong pointed out that since 2020, China’s mining industry has also carried out the layout as well as overseas, the recent tightening of market regulation-related policies, the mining industry will accelerate the transfer to North America.

In fact, as early as January 2018, the Office of the Leading Group for Special Rectification of Internet Financial Risks issued a document requesting local governments to guide the orderly exit of mining enterprises within their jurisdictions.

In April 2019, the National Development and Reform Commission published the “Industrial Development Structure Continuously Adjusting Enterprise Guidance Work Directory (for student comments)”, which classified virtual world currency mining as a category that should be phased out in a timely manner, but the official version released by the company that year removed coin mining from the phase-out list.

On May 18 of this year, the Inner Mongolia Development and Reform Commission announced that it would establish a reporting platform for virtual currency “mining” enterprises and fully accept letters and visits to report problems with virtual currency “mining” enterprises. Until May 21, the State Council Financial Market Stabilization and Economic Development Management Committee held a working meeting to clearly “crack down on bitcoin mining and trading information behavior.

An unnamed mining industry source told reporters that if the policy is landed, small miners will basically go to the cloud computing power, it is estimated that only the cloud computing power is left in the country; and the big mining companies and listed companies represented by Wu Jihan, Jiang Zhuoer and 500 Lottery will go to sea.

Just at the moment when many mining practitioners in China are still waiting and watching, the center of Bitcoin’s computing power has accelerated from China to North America. A Bitcoin mining map designed by the Cambridge Alternative Finance Center shows that mining in China accounted for 65% of the average monthly bitcoin hash rate back in the second quarter of 2020, down from 75.62% a year earlier. Currently in second place is the U.S. (7.24%), with Russia (6.9%) and Kazakhstan (6.17%) following close behind. Add to that the fact that more miners will be moving overseas, and the de-Chinaization of the mining industry is irreversible.

Cooperate with regulation, not necessarily flee
Under the common initiative of global environmental protection, carbon peaking and carbon neutrality are always the issues to be faced, and the restrictions and suppression are generally considered to be related to the national “double control” goal. This year’s National People’s Congress was the first time that the government’s work report was included in the carbon peak and carbon neutral goals.

The so-called carbon peak is to reach the peak of carbon dioxide emissions by 2030, and will not increase, while carbon neutral is to use all possible means to neutralize the output of carbon dioxide by 2060, to achieve zero carbon emissions. Under this policy trend, related high emission companies will be affected.

The current general view on the bitcoin mining crackdown policy is that the national restrictions on blockchain mining and bitcoin trading have had a very big impact on the industry, and that the mining industry may “go to sea” under policy suppression. This analysis is mainly aimed at the premise of a more diversified layout or a large mining plant, and the strength and planning layout of such companies themselves allow “Go to sea”, for many small and medium-sized mining, go to sea can only be the next best thing, moreover, in last year’s fourteenth five-year plan outline, blockchain as a digital economy key industry into the national planning layout, at present, the state also vigorously layout central digital currency, and a lot of demonstration about clean energy mining park is built, so this round Therefore, the impact of the policy on the industry is not fatal, but a wise move to introduce and channel the crypto ecology in the right time.

Why do you say so? Firstly, digital currencies are developing rapidly now, and the crazy trend in recent months has made the whole market overheated, or there is financial chaos, so this policy is just the right time to “wake up” the overheated market. Thirdly, the main gathering place of mining industry, such as Sichuan, is about to enter the abundant water period. If we can do a good job in the management of supervision and inspection before that, we can prepare for the “qualified” mining institutions to meet the abundant water period, which is beneficial but not harmful.

We should maintain a more objective and rational analysis of such a policy. In the second half of 2017, bitcoin trading and initial token offerings (ICOs) were banned in China, and the price of global crypto-digital currencies plummeted. But shortly thereafter, cryptocurrencies began to rally again, at one point setting new highs for the value of the currency, before falling deeply again. Much later, mainstream tokens such as Bitcoin created new market caps time and time again and established an extremely strong market consensus. So, this restriction is not a devastating blow to the industry, and you can look forward to a “spring in the trees” after a fresh overhaul or adjustment. The latest GalaxyDigital research report also points out that the Bitcoin correction will benefit the market in the long run.

| The Future of Pools, Miners, and Mining Farms
On May 26th, a Coinbase article, “Is Bitcoin the Clean Energy Enabler? Clarifying Five Myths About Bitcoin Mining” article sparked widespread interest again. The article mentions that bitcoin mining is not a significant contributor to global warming, instead miners are incentivized to go for the cheapest power, excess energy, and renewable energy sources whose environmental impact remains negligible.

At the same time it’s hard not to be shocked when hearing that bitcoin mining consumes energy on a scale equivalent to a country like Norway. But whether or not energy is used wisely depends heavily on the value derived from the use of the resource, and the total economic value of Bitcoin has exceeded $1 trillion many times over. Its consumption of energy is actually still far smaller than that of other financial systems: only half that of gold mining, and less than a fifth of the energy consumed by bank branches and ATMs.

The cryptocurrency world has gone from transaction de-china to arithmetic de-china within our country, but the capital rush to profit does not end there. Without available power, without data center resources, without clear legal definitions, and with unknown regulatory risks, the mining circle really can’t live well in the country either. Before finding an effective new outlet, it is the best policy to evacuate the mines as a coin factory. This is equally significant for the stability of the cryptocurrency circle.

Following the transaction to the sea, the mining farm is also going to the sea. Algorithmic power and trading, in the digital age, is not only reflected in the ability of digital currency, just the energy of finance amplifies everything. A thousand words, the Internet has accelerated the speed of the flow of information and capital, financial technology continues to give capital to take accelerating stimulants, how to find for the crazy capital to find a quiet and joyful path from the good, is the global financial markets in the digital era are facing the problem.

Whether domestic or foreign miners, the migration between regions does not solve the fundamental problem, the essence of which is to find the ultimate solution, whether from the policy, or with the advantage of the underlying value, to better extend the original intention and mission of blockchain technology.

Posted by:CoinYuppie,Reprinted with attribution to:
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