|
The "dual control" of energy consumption is becoming stricter, and regulatory conflicts are once again pointing to virtual currency.
On September 24, the National Development and Reform Commission, the Central Propaganda Department, the Cyberspace Administration of China and other departments issued the "Notice on Regulating Virtual Currency "Mining" Activities", listing virtual currency "mining" activities as an eliminated industry, requiring a strict prohibition on power supply to related enterprises, and strengthening the dual control constraints on energy consumption of new virtual currency "mining" projects.
Beijing News Shell Finance reporter noticed that as early as the end of 2019, the "Guidelines for Industrial Structure Adjustment (2019 Edition)" (hereinafter referred to as the "Guidelines") removed mining activities that were originally listed as obsolete industries. This was once misunderstood as giving the industry a "peace of mind pill", and this regulatory action sent a clear signal.
On the same day, the central bank, the Supreme People's Court, the Ministry of Public Security and other departments issued a notice stating that overseas virtual currency exchanges providing services to residents in my country are also illegal financial activities. Previously, virtual currencies had been clearly banned in China, and many exchanges moved their servers overseas.
The heavy crackdown caused Bitcoin, Ethereum, Litecoin and other currencies to fall. Bitcoin fell 5% in two hours, and as of 19:00, it was reported at $42,200 per coin; Ethereum and Litecoin fell more than 8%, and as of 19:00, they were reported at $2,845.43 per coin and $147.05 per coin respectively.
Banning "mining": once again listed as an obsolete industry
According to the notice of the National Development and Reform Commission and other departments, "virtual currency 'mining' activities" will be added to the "elimination category" of the "Guidelines for Industrial Structure Adjustment (2019 Edition)". Before the addition, virtual currency "mining" projects will be treated as eliminated industries, and investment will be prohibited in accordance with the relevant provisions of the "Decision of the State Council on Issuing and Implementing the <Interim Provisions on Promoting Industrial Structure Adjustment>".
What are obsolete industries? According to regulations, these are mainly outdated processes, technologies, equipment and products that do not comply with laws and regulations, do not have safe production conditions, seriously waste resources, and need to be eliminated.
A reporter from Shell Finance found that when the "Guidelines for Industrial Structure Adjustment (2019 Edition)" was officially released at the end of 2019, "virtual currency mining activities" that were originally included in the eliminated industries were deleted. Although the regulators had clearly banned virtual currencies at that time, it was once considered by some to have given the industry a "peace of mind".
After the release of the guidance catalogue, "mining" activities are still quietly going on in Sichuan, Inner Mongolia and other places. Shell Finance reporters have learned from interviews that Sichuan, Inner Mongolia and other places are areas with excess electricity, low electricity prices, and electricity (especially hydropower) cannot be stored. Instead of letting the water flow away, it is better to sell it to the mines.
However, since the beginning of this year, the above-mentioned regions have successively taken action to crack down on virtual currency "mining", and the "miners" who have been hit hard have been selling their second-hand graphics cards on platforms such as Xianyu.
Today, the regulation of virtual currencies has been further upgraded. "The regulation fills in the possible loopholes that were not specifically mentioned before, which is the difference between grayscale existence and illegal existence." Wang Pengbo, a senior analyst in the financial industry at Broadcom Consulting, explained the difference before and after the policy to Shell Finance reporters.
The reporter noticed that the "mining" activities listed as eliminated industries are still facing various bans. The notice clearly stated that the dual control of energy consumption of new virtual currency "mining" projects should be strengthened; abnormal electricity consumption monitoring and analysis should be strengthened; the electricity application and energy consumption of virtual currency "mining" enterprises should be strictly restricted, and it is strictly forbidden to supply power to enterprises with new virtual currency "mining" projects in the form of pre-grid power supply and dedicated lines; it is strictly forbidden to carry out virtual currency "mining" activities in the name of data centers, and the boundaries between "mining" and blockchain, big data, cloud computing and other industries should be clearly distinguished.
Behind this rectification, Bitcoin "mining" consumes an astonishing amount of electricity. According to media reports, a mine with 10,000 "mining machines" paid only 250,000 yuan in taxes in 2020, but its average monthly electricity consumption was as high as 25 million kWh. In the first four months of this year, it paid only 90,000 yuan in taxes, but its average monthly electricity consumption was as high as 45 million kWh, which is equivalent to an energy consumption of about 15,000 tons of standard coal.
It is also illegal for overseas exchanges to provide services to domestic residents
In fact, as early as 2013, multiple departments issued documents to clarify that virtual currency is a virtual commodity, financial institutions are not allowed to carry out virtual currency-related businesses, and no organization or individual may illegally engage in token issuance and financing activities.
It was from then on that virtual currency exchanges began to move their servers overseas.
On September 24, the central bank and other departments issued the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation", which pointed out that overseas virtual currency exchanges providing services to Chinese residents through the Internet are also illegal financial activities. Domestic staff of relevant overseas virtual currency exchanges, as well as legal persons, non-legal organizations and natural persons who knowingly or should have known that they are engaged in virtual currency-related businesses and still provide them with marketing, payment settlement, technical support and other services, will be held accountable in accordance with the law.
On the same day, Wen Xinxiang, Director of the Payment and Clearing Department of the Central Bank, also mentioned virtual currency exchanges in his keynote speech at the 10th China Payment and Clearing Forum. He said that from the perspective of infrastructure, blockchain is equivalent to the payment system of virtual currency and also the transaction database of virtual currency; virtual currency exchanges are equivalent to central counterparties and partially assume the functions of market makers.
"Virtual currencies are separated from the payment system and operate in a closed manner. They are transferred between internal 'accounts' and are cut off from the account system of commercial banks and payment institutions. They are only connected when they are exchanged for legal currency. They divert the payment business of banks and payment institutions and weaken the status of clearing organizations. They are used for illegal activities. The anonymity of virtual currencies makes it easier for them to become a trading tool for illegal and criminal activities." He summed up the challenges that virtual currencies bring to the payment system.
Regarding future rectification, the notice stated that a joint regulatory force should be formed to combat virtual currency activities. For example, financial management departments and cybersecurity and informatization departments should locate the IP addresses, specific enterprises and physical residences of mining sites identified by virtual encrypted asset big data monitoring platforms, and strengthen information sharing and data cross-verification with relevant regulatory departments to form a joint force for full-chain governance; energy regulatory agencies should increase efforts to investigate and punish illegal power supply projects and projects with power safety hazards, and supervise the behavior of participating in power market transactions in violation of regulations.
In addition, the central bank stated in its response to reporters' questions that it will continue to maintain a high-pressure situation, dynamically monitor and promptly deal with related risks, resolutely curb the speculation trend of virtual currency transactions, severely crack down on illegal financial activities and criminal activities related to virtual currencies, protect the property safety of the people in accordance with the law, and make every effort to maintain economic and financial order and social stability.
Heavy-handed regulation leads to Bitcoin "avalanche"
Since the beginning of this year, the authorities have frequently "called out" on virtual currencies, and the intensity of the crackdown has been increasing.
Just last month, Yin Youping, deputy director of the Financial Consumer Rights Protection Bureau of the central bank, said that illegal fundraising activities carried out in the name of "virtual currency" and "blockchain" will be resolutely cracked down. In the next step, the central bank will establish a normalized working mechanism, maintain a high-pressure situation, and continue to crack down on related trading speculation activities.
Back in June, the cryptocurrency industry was hit hard. On June 21, the central bank announced that the relevant departments of the central bank had recently interviewed some banks and payment institutions, including the Industrial and Commercial Bank of China, the Agricultural Bank of China, the China Construction Bank, the Postal Savings Bank of China, the Industrial Bank of China and Alipay (China) Network Technology Co., Ltd., regarding the issue of banks and payment institutions providing services for virtual currency trading speculation.
As the news came out, virtual currencies plunged. Bitcoin's intraday decline once approached 10%, and the 24-hour lowest price was about US$31,562 per coin. Ethereum fell by more than 10% at one point, falling below US$1,900 per coin.
The team that is “encircling and suppressing” virtual currency is also expanding. On May 18, the China Internet Finance Association, the Banking Association, and the Payment and Clearing Association jointly issued an announcement on preventing the risk of virtual currency trading speculation, emphasizing that financial institutions, payment institutions and other member units are not allowed to carry out virtual currency-related business. On May 21, the State Council Financial Stability and Development Committee meeting once again made it clear that it is necessary to crack down on Bitcoin mining and trading activities and resolutely prevent individual risks from being transmitted to the social field.
The three associations only require members not to participate, cooperate or support from the perspective of industry self-regulation. The statement of the Financial Committee of the State Council can be said to be an increase on this basis. Further targeting the "mining" and trading of Bitcoin as targets of crackdown, in fact, it can be said that at least at this stage, the risk of illegal trading of virtual currencies such as Bitcoin has become clear.
Meanwhile, Bitcoin once again experienced a sleepless night. Shell Finance reporters noted that in the morning of May 19, the price of Bitcoin plummeted. As of 11:07, the decline had reached 10.73%, and it was only $200 away from $40,000 per coin. It should be noted that in April this year, the price of Bitcoin once exceeded $60,000 per coin; at the same time, the price of Ethereum also fell by 8.75%, and the price was close to $3,000 per coin. Just a week ago, its price once exceeded $4,000 per coin.
However, this was just the beginning of the "nightmare". At noon on the 19th, the price of Bitcoin fell below $40,000 per coin. After 8:30 in the evening, the price of Bitcoin showed a free fall, with the lowest price in 24 hours reaching $31,100 per coin, which was "halved" compared to the highest point this year.
The effect of stricter supervision is gradually showing. Previously, Yang Ming (pseudonym), a person in the cryptocurrency circle, told reporters that many projects have "failed" and the cryptocurrency circle has turned from bullish to bearish. "Banks can track every fund in every account, whether it is buying or selling (virtual currency). This has happened before. Basically, they would block the account after tracking a few transactions. Now that banks have strengthened monitoring, users are even more afraid to trade."
However, some senior people in the cryptocurrency circle have admitted to reporters that there are still difficulties in monitoring virtual currency transactions. On the one hand, over-the-counter transactions (OTC) in the cryptocurrency circle are difficult to monitor; on the other hand, if virtual currency cannot be sold in RMB, it can be sold directly for US dollars, and then exchanged through banks and converted into RMB. All you need to do is hold an overseas bank card. |
