Regulation is coming, where do bitcoin miners go from here?

The largest cryptocurrency mining gathering area in the country is in the Sichuan-Guizhou region. This release is not the first time that Inner Mongolia has raised its voice about regulation of cryptocurrency mining in its jurisdiction. Miners still in Inner Mongolia who have not chosen to leave Fenqiang are likewise waiting.

Regulation is coming, where do bitcoin miners go from here?

“Have you seen Waiting for Godot?”

“Right now I fit into that state.”

On May 25, the Inner Mongolia Development and Reform Commission issued “eight measures to resolutely combat and discipline virtual currency “mining” behavior (draft for comment)”, according to eight types of objects were put forward different combat and discipline strategy.

This announcement has put all cryptocurrency miners in Inner Mongolia in a difficult position.

Bitcoin miners in Inner Mongolia are sitting on the edge of their seats, waiting for the doomed policy to come to fruition.

Should they stay or go? This is a question that all Inner Mongolia miners and even miners across the country are closely concerned about at the moment ……

In fact, not only miners, but also the whole industry is trembling with the tightening of regulation.

On the very day of the announcement, Bitcoin took a relatively large dive, and after that, Bitcoin dropped $10,000 in two days like mercury, sending the entire cryptocurrency industry into a panic ……

“Regulation is Coming Again
In fact, this release is not the first time that Inner Mongolia has sounded off about regulation of cryptocurrency mining in its jurisdiction.

On February 25 of this year, the Development and Reform Commission of Inner Mongolia Autonomous Region issued the “Opinions on Ensuring the Completion of the “14th Five-Year Plan” Energy Consumption Double-Control Target Tasks (Draft for Comments)”, which showed that in order to complete the “14th Five-Year Plan” energy consumption double-control target tasks in Inner Mongolia Autonomous Region, virtual currency mining projects will be comprehensively cleaned up and shut down, and all of them will be withdrawn by the end of April 2021, and new virtual currency mining projects are strictly prohibited.

The follow-up “crackdown” came one after another.

On the evening of May 18, the official public number of the People’s Bank of China reproduced a joint announcement issued by the China Payment Clearing Association, the China Banking Association and the Mutual Fund Association, specifying that financial institutions and payment institutions are not allowed to carry out business related to virtual currencies.

In the morning of May 19, the Inner Mongolia Development and Reform Commission also issued an announcement to set up a reporting platform for virtual currency “mining” enterprises and to fully accept letters and visits regarding virtual currency “mining” enterprises.

Immediately afterwards, on May 21, the Financial Committee of the State Council held its 51st meeting, with a special emphasis on “cracking down on bitcoin mining and trading, and resolutely preventing the transmission of individual risks to the social sector”.

After that, on May 25, the Inner Mongolia Development and Reform Commission issued “Eight Measures to Resolutely Combat and Discipline Virtual Currency “Mining” (Draft for Comments)”, which proposed different strategies to combat and discipline each of the eight types of objects, with the consultation period from May 25, 2021 to June 1, 2021.

The draft opinion points out that for communication enterprises, Internet enterprises and other entities with virtual currency “mining” behavior, according to the relevant provisions of the “Regulations of the People’s Republic of China on Telecommunications”, the competent authorities shall revoke the value-added telecommunications business license according to law and seriously pursue responsibility.

For the existence of virtual currency “mining” behavior of the relevant enterprises and related personnel, in accordance with the relevant provisions into the blacklist of breach of trust; for public officials to use their positions to participate in virtual currency “mining” or to provide convenience and protection, all transferred to the discipline inspection and supervision organs to deal with.

Along with the gradual increase in regulation, other mining-related companies in the cryptocurrency industry have also felt the “danger”.

On May 20, Dory Creek, a wholly owned subsidiary of mining company Bit Fawn, announced that it was investing in a cryptocurrency mining facility in Texas, USA, together with BIT Mining.

Just six days later, on May 26, Bitmajor blocked all IPs in mainland China and stated that it would ensure that the platform would not provide services to residents of mainland China.

According to a source close to Bitmain, many of Bitmain’s employees are currently on “vacation”. One of the reasons for this is that regulation is coming and the demand for mining machines is declining sharply.

During the bull market this year, the official price of an Ant S19 was 36,500 yuan, but the off-site price was as high as 60,000 to 70,000 yuan, and there was even no market for it, with shipments scheduled for October this year.

However, when the policy was introduced, the OTC price of the S19 dropped to $40,000 to $50,000, and Bitmain’s original branch office in Inner Mongolia, Dalit, has been written off.

Faced with the surging tide of regulation, cryptocurrency practitioners across the country are trembling with fear. This feeling is probably even stronger in Inner Mongolia, which is at the center of the regulatory storm.

Why Inner Mongolia? Why Inner Mongolia?
If you were to count the most suitable provinces for mining in China, you couldn’t avoid Xinjiang, Inner Mongolia, Gansu, and Yunnan, Guizhou, and Sichuan in any case.

Among them, the largest cryptocurrency mining gathering area in the country is in the Sichuan-Guizhou region, especially Sichuan, which relies on cheap hydropower, which is relatively clean, but the problem is that there are dry periods that are not stable enough.

The second largest cryptocurrency mining gathering area is in Inner Mongolia, which is rich in coal resources. The reason why it attracts miners is that, on the one hand, it is a vast and sparse area, and for large mines that cover a large area and rely heavily on heat dissipation, choosing to mine in these areas allows them to rent land at a cheaper price, and the higher latitude, lower temperature and flat traffic make it more convenient for miners to migrate while obtaining high quality heat dissipation conditions.

In addition, one of the more important reasons is that Xinjiang and Inner Mongolia have well-developed coal mining resources, which drives the price of thermal power there much lower than in other provinces.

According to the 2021 Inner Mongolia electricity tariff, the maximum demand for large industrial electricity is at 28 yuan per kilowatt/month, while the price in Beijing is at 48 yuan for the same period, a 71% difference between the two.

Therefore, the cheap electricity supply, the geographical conditions favorable for building and dissipating heat, and the local openness policy made Inner Mongolia once a very ideal place for mine construction.

According to media reports, at its peak, mining farms in Ordos could mine more than 100,000 bitcoins a year.

According to the Bitcoin Power Consumption Index compiled by Cambridge University, China currently accounts for about 65% of all bitcoin mining computing power worldwide, with Inner Mongolia alone accounting for 8%, compared to 7.2% in the United States.

Inner Mongolia alone has more bitcoin computing power than the United States.

However, the good times didn’t last long. Starting this year, a crackdown on cryptocurrency mining has begun, starting with Inner Mongolia and including Xinjiang, Sichuan and other provinces across the country where mining farms gather.

Among them, Inner Mongolia in particular is the most serious, and its strength is unprecedented.

As a result, Inner Mongolia has introduced a series of regulatory measures that have been called “the strongest regulation in history”.

There are many reasons why the Inner Mongolia government has changed its attitude and started to regulate cryptocurrency mining in a drastic way.

Some believe that it is because in this year’s two sessions, the government work report proposed new concepts such as “carbon neutrality” and “carbon peaking”.

These concepts are commitments made in China’s speech at the UN General Assembly in 2020, where the goal is to reduce the country’s energy consumption growth to about 1.9% by 2021.

It is worth noting that last September, according to China Environment News, Inner Mongolia, with 1.7% of the country’s economy, consumes 5.2% of the country’s energy. The mismatch between the economic value created and the energy consumed has put Inner Mongolia in an energy dilemma.

In order to solve this problem and to respond to the call for carbon neutrality, the Inner Mongolia government had a meeting in February this year and decided to reduce energy consumption per unit of regional GDP by 3% and control energy consumption within 5 million tons of standard coal for the whole Inner Mongolia.

Since we want to save energy and reduce emissions, cryptocurrency mines, which are mainly mining, consume huge amounts of electricity and are quite controversial, naturally bear the brunt.

Whatever the reason, regulation is indeed coming in earnest for cryptocurrency mining.

Where should miners go?

“At the moment, we are still waiting and watching because the detailed policy has not yet been landed.” Xiao Feng, a miner in Xinjiang, told Deep Chain Finance, “In the general direction, we still embrace the regulation.”

Miners waiting for their boots to fall are in the minority, and miners Fenqiang, who are still in Inner Mongolia and have not chosen to leave, are likewise waiting.

Some are waiting, but many miners, including miner Lu Ping, are already ready to leave.

“As soon as I saw the news, I felt my scalp was a bit tingly and dizzy, and it took me a long time to get over it.” Lu Ping told Deep Chain Finance, “Then I opened my phone and started looking for the contact information of my friends who were mining in Xinjiang and Sichuan.”

In fact, since February 25 this year, the Inner Mongolia government released “to ensure the completion of the “14th Five-Year” energy consumption double control target task of a number of safeguards (draft for comment)”, Inner Mongolia’s miners began to leave off and on.

The miners started to leave intermittently after the “14th Five-Year Plan” was published. “They dismantled the wires, divided them, contacted the site, commissioned the transportation, and then unloaded and loaded the machines.

It’s like living in a house for more than a decade and suddenly having to relocate – uncomplicated, but tedious.

For Xiaofeng, although the current Xinjiang has not yet issued the corresponding documents, but the lips of the cold, Xiaofeng is also thinking about the way out of the next.

In Xiaofeng’s mine, there have been many customers have approached her to ask about the situation. “We have the most optimistic expectations, but at the same time, we must also have the worst plans.”

In Xiao Feng’s opinion, this worst intention is to go to sea, and this is also one of Fenqiang’s intentions.

” Originally, we wanted to migrate to Yunnan, Guizhou and Sichuan first, just as the abundant water period is coming.” Fenqiang told Deep Chain Finance, “But it seems that the whole country is tightening up during this period.”

On May 27, in order to fully understand the situation related to virtual currency “mining” in Sichuan, the National Energy Administration’s Sichuan Supervision Office issued a notice that a small-scale seminar will be held on June 2.

It is worth noting that one of the contents of the meeting is that the State Grid Sichuan Electric Power Company, Sichuan Energy Investment Group, respectively, to report their respective supply area virtual currency “mining” and related recommendations, shut down virtual currency “mining” on the impact of this year’s Sichuan abandoned hydropower analysis.

Although the focus of this meeting is to discuss and exchange, and will not introduce corresponding policies and regulations.

But in Fenqiang’s opinion, Sichuan is likely to eventually “follow the example” of Inner Mongolia.

Therefore, for miners nationwide, there are only two ways out: either actively cooperate with the local government to rectify the situation, or go to sea.

Reform or go to sea? The “Sea” is not easy.
It is not easy to go to sea.

Earlier, during the bear market phase in 2019, the mining revenue was low due to the low price of bitcoin and the high cost of electricity. There were many miners who chose to go abroad to Iran, Russia and other countries to continue mining.

However, on the one hand, miners have difficulty protecting their property because of the long distances and the fact that they are in a foreign country.

There are media reports that in Iran, for example, a branch of its army, the Islamic Revolutionary Guard Corps, has a lot of influence at the border and has the power to decide which goods can enter Iran and which cannot. Miners are at risk of being detained or confiscated at the border, and while some logistics companies may have insurance policies to cover losses, they can only be compensated by decree, yet there is no way to get the miners back. “

In addition, overseas is not that big volume can eat China’s computing power.” Xiao Feng told Deep Chain Finance.

As mentioned above, the current bitcoin computing power in Inner Mongolia exceeds that of the entire United States, which means that if Chinese miners go overseas to the U.S., they will also need to correspond to build enough infrastructure such as substations and the like.

It takes a long time before and after, and also tests the cash flow of the mine.

What’s more, in the current context of increasing global tensions and epidemics, going offshore is not the wisest choice for miners.

In addition to going to sea, the other side is to strictly follow local regulations.

Previously, many mining sites have been playing ball in order to get cheaper electricity prices, some packaged themselves as “cloud computing” infrastructure encouraged by the policy, and some are still enjoying policy concessions in disguise.

After this, if the mine wants to continue to seek development, once this tricky means is no longer desirable.

Beyond that, it is more important to look for clean energy.

For now, thermal power, although stable, but serious pollution, hydropower, although abundant, but there is a long dry period each year, and photovoltaic, wind power is unstable and difficult to store.

The road to the sea is blocked and long, the domestic clean energy quota is not enough, in the future, there will certainly be many miners are eliminated. During the interview, many miners expressed the same concern.

Posted by:CoinYuppie,Reprinted with attribution to:
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