An important piece of news hit the circles yesterday: at the 51st meeting of the State Council’s Financial Stability Development Committee, chaired by Vice Premier Liu He, director of the Finance Committee, it was clearly proposed that we should resolutely prevent and control financial risks, strengthen the supervision of financial activities of platform companies, crack down on bitcoin mining and trading practices, and resolutely prevent the transmission of individual risks to the social sector.
As far as I can remember, this is the first time the regulator has explicitly proposed a crackdown on bitcoin mining, so it’s worth an in-depth reading. After reading the full news report, I believe that this meeting contains two meanings and one key point in a clear and dark way.
- On the bright side the country is trying to prevent financial risks and guard against any hints that could allow financial risks to spill over from individuals to society as a whole. And in the regulatory thinking, bitcoin mining and trading also belongs to one of the key areas of monitoring.
2, the news also implies that the regulation believes that the current environment is facing great financial risks, and in order to prevent such risks from detonating and disrupting our financial order, the nation should take precautionary measures in advance. 3, the key point of the whole message is “to prevent individual risks to the social sphere”. Let’s look at the second point, along this line of thought, where does this risk come from? I think the source of this risk is still mainly in overseas, especially in the United States. The U.S. government has released a lot of water, causing money to spill over, pushing up the prices of almost all investments (including bitcoin) and commodities, and starting to export inflation to the world.
This risk, once detonated, will have global repercussions, so the country is preparing in advance and strictly preventing individuals from being involved in this risk, hence the specific mention of bitcoin mining and trading. In fact this risk is not only something to be considered at the national level, but individuals as digital currency investors should also consider and take precautions in advance, that is, as I have mentioned repeatedly: don’t play with leverage, don’t pike, don’t invest in debt, and don’t use funds that affect your life.
With this news, it is good for each of us investors to remind ourselves of this risk again. Let’s look at the first point again: why would the state explicitly propose a crackdown on bitcoin mining? I think that besides the financial risk, another possible reason is that the state believes that some bitcoin mining is using thermal power, which is contrary to the country’s carbon neutral development strategy. Finally, we should pay particular attention to the key words in the news, “resolutely prevent the transmission of individual risks to the social sphere.” —— The state is worried about the transmission of irrational behavior of retail investors to society.
Regardless of the state’s policy itself, I’m afraid that the entire mining industry, including bitcoin mining, will see two major changes: First, POW-based digital currency mining will migrate on a large scale, gradually moving from the country to overseas; even in the country, it will probably only exist in areas such as Sichuan, where hydroelectric power generation is predominant. The second is that mining companies will probably gradually face corporate and big money investors in order to prevent risks, and will not be open to retail investors. Just after the news was sent, it was rumored online that a large domestic mining company began to cancel the mining machine purchase service provided to retail investors.
In the future, the capital threshold for participation in mining may be adjusted very high by the mining company, thus stopping the participation of retail investors. With this example demonstration, in the future not only bitcoin mining, including ethereum mining, Filecoin mining and other domestic mining companies may be in order to avoid regulatory risks no longer directly open to retail investors. The average investor will face the hassle of this newly introduced policy in addition to the long term problem of access to gold in the industry. But in fact, it is also the retail investors who are more affected by this problem.
Therefore, it seems that there is an increasingly obvious signal in the industry: the threshold for retail investors to participate is getting higher and higher, and there will be less and less room for retail investors with small capital to find opportunities here in the future. The country is hoping to take advantage of this governance and consolidation, so that the majority of small and medium-sized retail investors out of this field, in order to avoid retail investors because of the difficulty of controlling risk, investment damage caused by social unrest.
So if you understand the state’s policy from the perspective of risk control, you can understand the intention of regulation. In the end, it depends on whether each investor has a clear understanding of the risks in this field and can withstand the various risks in this field. Investors have a clear understanding of all these risks, including those from regulation, and it is also a test for every rational investor.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-regulation-is-once-again-heavy-handed-how-is-the-market-afterwards/
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