Domestic policies are getting tighter, sparking waves
On May 18, China Internet Finance Association and two other associations jointly issued “Announcement on the Prevention of Virtual Currency Transactions Speculation Risk”, underscoring the virtual currency transactions speculation risk, implying that virtual currency transactions are illegal in financial activities, and financial institutions and payment agencies should not provide support and services for virtual transactions.
On May 21, Vice Premier of the State Council, Liu He presided over the fifty-first meeting of the Financial Stability and Development Commission of the State Council to study the next phase of financial. The meeting emphasized cracking down on Bitcoin mining and trading practices, and was determined to prevent individual risks from passing on to the society.
With the continuous modification of regulatory policies, domestic mining operators will face a sudden decline in business volume, shortage of funds and other challenges, as the future of mining looks bleak. The stance of the Financial Stability and Development Commission of the State Council on tightening virtual currency mining regulation is due to financial risks and concerns about energy consumption from mining.
Inner Mongolia takes the lead in response
Inner Mongolia became the first place to issue a policy to “crack down on the mining of virtual coins” after the Financial Stability and Development Commission of the State Council stepped up regulation of virtual coins. On May 25, the Inner Mongolia Development and Reform Commission announced eight measures to strengthen the crackdown on virtual coin mining. It not only referred to that industrial parks, data centers, self-owned power plants, internet enterprises, internet cafes and other participants in mining activities will be held responsible according to relevant laws and regulations, but also the related enterprises and personnel of virtual currency mining activities will be blacklisted for discrepancies according to relevant provisions.
Not only that, the individuals involved are equally treated, and the draft notes, public officials, who take advantage of their posts, participate in virtual coin “mining” or provide it with convenience and protection, now come under the scanner.
Whether Sichuan will be the last “resort” is debatable
After the Inner Mongolia article, the mining circle is also waiting to see whether Sichuan will follow the same path. On June 2, Sichuan held a virtual coin “mining” related situation symposium. Many industry insiders said that this meeting is only a research meeting, not decision-making meeting, and its impact on the industry is limited without the changes in the policy. So, it is not clear whether Sichuan will tighten regulations too.
There’s a big difference between hydropower and thermal power mining, and Sichuan already has a lot of abandoned power during the abundant water season, and mining is the most efficient way to use it because it doesn’t require electricity to be transferred, so simply moving the mine to a power-generating location can convert it directly into revenue. Therefore, if Sichuan and Yunnan consider abandoned water consumption factors, in the abundant water period the abandoned electricity can be used for mining, the domestic may still retain some mines. This is the reason why some miners are still waiting.
Opportunities and challenges of “gold rush” overseas
Mining is essentially a manufacturing process for digital currency assets. Given the uncertainty of domestic policy, if there is policy support in North America and other countries, and electricity is cheap and infrastructure is mature, it is a better choice to deploy mines overseas.
Opportunities are often accompanied by challenges, says Liu Changyong, director of the Blockchain Economic Research Center of Chongqing Technology and Business University, where the mines will first consider low electricity prices. In 2018 and 2019, Iran’s electricity prices were very low, but policy was unstable, and some of the mines were even confiscated directly by the government after they were transferred. “It was only later that people discovered that the policy environment was also important. Now it is mainly transferred to the slightly remote places of developed countries, such as Canada and northern Europe, with low electricity prices and relatively stable and friendly policies, and moreover, low temperatures are beneficial for machine cooling.”
Planning ahead, BTC has already started overseas layout
In fact, as early as in April this year, Ms. Meng Xiaoni, vice president of BTCM and chief executive of BTC.COM, expressed her views about the mining “change”. The restructuring of the global energy sector, she argues, is a global revolution that began in 2014, and by 2020, at the 75th UN General Assembly, China’s goal of carbon neutralization has given a crucial signal of huge Chinese capacity, China’s market and Chinese demand, and calls for a more environmentally friendly approach. This is bound to provide great leadership for the global economic industry, but also has a strong butterfly effect, in the future there will be more countries to join the construction group, leading to global economic change.
To this, BTC also lays out overseas early. Moreover, there are frequent actions taken recently!
On May 19, BTCM announced a legally binding investment agreement with Dory Creek, a wholly-owned unit of BitDeer, to jointly invest in an encrypted digital currency mine in Texas. BTCM plans to invest a total of US $25.74 million.
On May 24, BTCM announced that it would set up a mine in Kazakhstan, with a total investment of RMB 60 million, to build and operate a 100-megawatt mine with a Kazakh company. When the mine is completed, the company will hold an 80% stake in the Kazakhstan mine, with a 20% stake in the partner.
BTCM has been advocating low-carbon and environmentally friendly mining. Clean and low-carbon energy accounts for more than 98% of the company’s own mine energy mix after the Texas mine was completed. In the future, BTCM will continue to actively implement the goal of “carbon neutralization” and actively seek more high-quality mineral resources overseas!
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No State Today USA journalist was involved in the writing and production of this article.
