On May 21, Vice Premier Liu He presided over the 51st meeting of the State Council’s Financial Stability and Development Committee to study and deploy key tasks in the financial sector in the next phase. The meeting emphasized cracking down on Bitcoin mining and trading activities and resolutely preventing individual risks from being transmitted to the social field.
Affected by this news, Bitcoin and cryptocurrencies generally fell sharply. It is worth noting that this is the first time that the central government clearly proposed to “rectify” Bitcoin mining. The entire “mine circle” instantly exploded, and B.TOP and Huobi Mining Machine Mall made their voices. Decided to stop providing services such as purchasing mining machines for customers in mainland China.
Several industry insiders analyzed to the Science and Technology Innovation Board Daily that under the condition of stricter supervision, large-scale mines and mining pools will be the most affected; it may be like the promulgation of the “94” document in 2017, resulting in a large number of miners and computing power. Overseas transfer.
However, many miners told reporters that it is too early to talk about “going out to sea”. After all, the meeting has just been held and most of the miners are still on the sidelines, looking forward to more detailed policies.
Shut down mainland services one after another
Yesterday, a screenshot of the “Huobi Mall Customer Service” was circulated online, saying that in accordance with China’s latest industry regulatory policies, the mall decided to suspend the provision of mining machines and derivative services for users in mainland China; for those who have purchased BTC mining machine products ( Users who include “mining machine + hosting”, “one-stop”, and “worry-free mining” will suspend the provision of mining machine hosting services, and the machines will be removed from the shelves today (23rd).
The reporter of “Kechuang Board Daily” confirmed from multiple independent sources that this rumor is true. Huobi responded that since the beginning of this year, the globalization of the mining machine mall business has been accelerating. In order to concentrate on expanding overseas business, the mining machine mall has decided to suspend the provision of related services for users in mainland China. The solution of the mining machine held by the old user will be notified to the customer later.
In the early morning of May 22, Jiang Zhuoer, the founder of Lebit Mining Pool (B.TOP), issued a statement on social media, deciding to stop providing mining machine purchasing services for customers in mainland China.
Jiang Zhuoer said that the new policy of the State Council’s Financial Stability and Development Committee has the most obvious impact on large-scale mining farms, but he judged that Bitcoin mining will continue, but the main body of Chinese mining has changed from large-scale mining farms to large mining farms. Family miners, small and medium miners.
On the same day as the Lebit Mining Pool, the relevant person in charge of Mint Mining also announced that it has deployed Canada and Kazakhstan.
Bitcoin really consumes energy?
“Mining” is a jargon in the Bitcoin world. It specifically refers to the use of the computing power of the chip to continuously “hash collisions” in the blocks generated by the Bitcoin system to win the right to bookkeeping and obtain the system Bitcoin rewards. This boring and repetitive process is vividly called “mining” in the Bitcoin industry.
In the “mining” process, the biggest expenditure is the initial mining machine investment and the daily amount of electricity consumed by the mining machine’s daily operation. In order to reduce production costs, most bitcoin mines “live with electricity.”
With the global carbon neutral trend, Bitcoin’s energy consumption problem has also been pushed to the forefront. So how much energy does Bitcoin consume?
Recently, the British “Financial Times” published a feature article entitled “Dirty Currency: The Increasing Problem of Bitcoin Energy Consumption”. As mentioned in the article, the latest calculation of the Bitcoin Electricity Consumption index by the University of Cambridge seems to indicate that Bitcoin mining consumes 133.68 terawatt-hours of electricity each year-this estimated figure based on best guesses in the past Rising continuously in 5 years. This makes Bitcoin’s power consumption slightly higher than Sweden (131.8 TWh in 2020) and second only to Malaysia (147.21 TWh).
However, Bitcoin’s true power consumption figures may actually be much higher. The rise in the price of Bitcoin will attract new miners to mine with older, less efficient equipment.
And China’s Bitcoin mining activities are the most active in the world. According to data from the Centre for Alternative Finance Research (CCAF) of the University of Cambridge, China’s Bitcoin mining power accounts for 65% of the world.
In mining activities, the most important cost is the electricity bills required for the operation of “mining machines”. Therefore, “mines” are usually concentrated in areas with sufficient electricity and cheap electricity, such as Xinjiang and Inner Mongolia, which are rich in thermal power, and Yunnan and Sichuan, which are rich in hydropower. , Guizhou. Among them, Xinjiang alone accounts for 35% of the national Bitcoin mining power.
On April 6, “Nature Communications” published a paper entitled “Policy Assessment of Carbon Emissions and Sustainability of China’s Bitcoin Blockchain Operation”. Under the circumstances, the carbon emissions of China’s Bitcoin mining will rank among the top ten among 182 prefecture-level cities and 42 major industrial sectors in China, accounting for about 5.41% of the carbon emissions of China’s power generation, and the industry’s per capita GDP. Emissions will also reach 10.77 kg/USD.
“After the publication of the paper “Policy Assessment of Carbon Emissions and Sustainability of China’s Bitcoin Blockchain Operation”, China’s Bitcoin mining industry policies have rapidly tightened.” Liu Changyong, Director of the Blockchain Research Center of Chongqing Technology and Business University It is believed that the main domestic regulatory power comes from the “carbon emission and carbon neutrality” policy.
Wait-and-see miner
“It is the consensus of the industry that the mining industry develops overseas. It used to be inclined to ultra-low electricity prices. However, after encountering policy risks in Iran and other places, it has recently mainly flowed to North America where policies and energy are relatively stable.” Liu Changyong said The Board Daily said.
After the publication of the “94” documents of the five ministries and commissions in 2017, most domestic exchanges were closed, and they began to look for overseas development opportunities. Liu Changyong pointed out that since 2020, the mining industry has also deployed overseas. The recent tightening of regulatory policies has accelerated the transfer of mining to North America.
In fact, as early as January 2018, the Office of the Leading Group for the Special Rectification of Internet Financial Risks issued a document requesting local governments to guide mining companies in their jurisdictions to exit in an orderly manner.
In April 2019, the National Development and Reform Commission announced the “Industrial Structure Adjustment Guidance Catalog (Draft for Comment)”, which classified virtual currency mining as a category that should be eliminated, but in the official version released that year, the mining currency was removed from the list of elimination.
On May 18 this year, the Inner Mongolia Development and Reform Commission announced that it has established a virtual currency “mining” corporate reporting platform to fully accept complaints and reports on virtual currency “mining” corporate issues.
Until May 21, the Financial Stability and Development Committee of the State Council held a meeting to clarify “combating Bitcoin mining and trading behavior.”
An unnamed mine worker analyzed to a reporter from the Science and Technology Innovation Board that if this policy is implemented, small miners will basically go to cloud computing power, and it is estimated that only cloud computing power will remain in China; and like Wu Big miners and listed companies represented by Jihan, Jiang Zhuoer, and 500 Lottery.com will go to sea.
“The state is actively guiding the mining industry and has been working hard to effectively utilize the mining industry. This policy of the Financial Commission is actually aimed at financial stability and protecting the interests of investors.” The person said, “Now we are waiting for the implementation of specific regulations. If the policy is’ If one size fits all, many mines are actually turned underground, which makes it even more impossible to protect investors.”
Several miners and related persons told the Science and Technology Innovation Board Daily that at present, miners are generally still waiting for more policy news. After all, no detailed documents have been seen yet.
Liu Changyong, director of the Blockchain Research Center of Chongqing Technology and Business University, emphasized that the tightening of policies is national. Inner Mongolia is one step ahead, and Sichuan’s recent policies are also tightening. On the whole, if there are no significant changes in domestic mining development policies, The outlook is dire
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.