Under High Pressure, Where Does Bitcoin Mining Go From Here?

The migration of miners, both domestic and foreign, between regions does not solve the fundamental problem.

Under High Pressure, Where Does Bitcoin Mining Go From Here?

The recent news after news has shown that it is necessary to proceed in the matter of mining consolidation. Just the day before yesterday, the National Development and Reform Commission issued a “national integrated big data center collaborative innovation system arithmetic hub implementation plan”, the plan said, to layout the national arithmetic hub nodes, the implementation of the “East number West calculation” project, the construction of the formation of a 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 arithmetic layout.

Readers can get a preliminary idea of the recent policy steps through this timeline.

On May 14, State Grid Sichuan Aba Power Co., Ltd. also issued a notice of power restriction and blackout.

On May 19, personnel from the Inner Mongolia Development and Reform Commission said that they will continue to regulate virtual currency mining under high pressure in the future.

On May 21, the Finance Commission explicitly cracked down on combating 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.

……

Cooperate with regulation Not necessarily to escape

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 of this time 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. This policy trend will affect related high emission companies.

The current general view on bitcoin mining crackdown policy is that the state’s 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 large mining plants, which are allowed by the strength and planning layout of such companies themselves “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 at 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 Galaxy Digital research report also points out that bitcoin’s correction will benefit the market in the long run.

The Way Out Is Still Compliance: Consensus on Mechanisms Needs Policy Guidance

The first to be hit by the enactment of restrictions on mining and a crackdown on bitcoin trading is the mining ecosystem, which is closely tied to the interests of the miners who work in it. Here we can look at the important position of miners through bitcoin. It is important to note that the role of miners, in both the primary and secondary markets, has a different role status: in the primary market, the supply of bitcoin is constant because the rules determine the quantity and pace of issuance, and at this time miners are all about demand, the more miners (arithmetic) to mine, the stronger the demand on behalf of the demand side, directly pushing up the In the secondary market, miners become the most important supply side because they are the ones who hold the first handful of bitcoins, while users who buy and use bitcoins speculatively become the demand side of the secondary market, and the other type of supply side is the holders of used bitcoins.

Currently, the value of a bitcoin is hovering around $40,000, which has more than doubled relative to the same time last year. With the nature of profit-taking, some miners are definitely going offshore, while others are cooperating with the recent regulatory spirit of the relevant departments and have temporarily stopped access to IPs within the mainland. In essence, no matter what form it takes, compliance will become the way to go for the crypto world. More than once, whenever a project is launched or an important meeting occasion, industry players have always done discussions around compliance. From an objective point of view, in every blockchain meeting, people’s understanding of blockchain and cryptocurrency is very confusing and their actions are extremely blind, and there has been no clear answer as to what exactly this compliance standard is. This proposal or government call points out a clear direction for the industry and also provides a very good demonstration case for accelerating blockchain compliance.

As for why regulation is needed, we need to look at the development of blockchain and bitcoin from the perspective that blockchain creates a mechanism consensus that is different from traditional third-party licensing, which is naturally formed. This naturally formed mechanism consensus proves a unique personality in terms of trust value such as non-tamperable and irrevocable, with no privileges throughout the process, equal status for all participants, and a fair process without the need for third-party re-involvement. The secular consensus in the monetary field is represented by fiat currencies, and the first innovative application of mechanism consensus is cryptocurrencies. However, it is still extremely challenging to see whether this innovation is finally verified as a success, especially if the specific innovation seen so far can be recognized with certainty. What we can see now is that acceptance by users, and in particular the number of users who can adopt and use it, is back in the realm of the “mundane”, because for a mechanism consensus to be widely accepted and adopted, it still needs to pass the threshold of the “mundane”, and cryptocurrencies need to evolve logically into cryptocurrencies. The logical evolution of cryptocurrency into a universally accepted method requires regulation.

Bitcoin, as the first innovative application, was once called digital gold and had a super-scale secular cult. With the emergence of various cottage coins, modal coins and derivative coins, the cryptocurrency industry will undergo its own evolution and iteration according to the normal development law, and then form a more universal value benchmark, and continuously improve in terms of application practicality, replacing the early blind cult with ecological value.

The Next Potential Zone for the Mining Industry

The first external impact of the restriction is the decline in computing power, including ant mining pools, F2poo, poolin, etc. The more macro impact is the gold rush and reshuffling of the industry, new mining service providers or mining related sectors will be under pressure to force their own revolution, many industrial layout players have a better chance to win in this round of reshuffling.

Another is whether Bitcoin, as a value storage layer, can play another level of value with the help of nodes, such as other segments of the crypto ecology such as Filecoin can follow the trend and leverage the miner nodes of Bitcoin and Ether to form a mutually empowering industrial pattern. “exponential” growth. At present, it may still be at a very early stage, but it is likely to form such a pattern in the future. In the “Implementation Plan of the National Integrated Big Data Center Collaborative Innovation System Arithmetic Hub” issued by the National Development and Reform Commission, an important footnote is the construction of a new arithmetic network pattern, and bitcoin and other mining nodes will most likely become the first soldiers in the construction of this arithmetic pattern.

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

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/under-high-pressure-where-does-bitcoin-mining-go-from-here/
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