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After the Financial Committee of the State Council proposed on May 21 to crack down on Bitcoin mining and trading, Inner Mongolia became the first region to issue policies to crack down on virtual currency mining. On May 25, the Inner Mongolia Development and Reform Commission issued the "Eight Measures to Resolutely Crack Down on and Punish Virtual Currency "Mining" Behavior (Draft for Comments)" (hereinafter referred to as the "Draft"), proposing different crackdown and punishment strategies based on eight categories of targets. The period for soliciting opinions is from May 25, 2021 to June 1, 2021. According to the "Draft Opinion", the background of its organization and drafting is in accordance with the deployment requirements of the 51st meeting of the Financial Stability and Development Committee of the State Council on cracking down on Bitcoin mining and trading behaviors, and strictly implementing the "Several Guarantee Measures of the Inner Mongolia Autonomous Region to Ensure the Completion of the "14th Five-Year Plan" Energy Consumption Dual Control Target Tasks" (hereinafter referred to as the "Guarantee Measures"), and in order to further clean up virtual currency "mining" behaviors, strengthen crackdowns and penalties, build a long-term regulatory mechanism, maintain market order, the big data industry environment, and prevent financial risks. Since February this year, Inner Mongolia has begun to clear out virtual currency mining. The draft of the "Safeguard Measures" released at that time proposed to comprehensively clean up and shut down virtual currency mining projects, and all of them will be withdrawn by the end of April 2021, and new virtual currency mining projects are strictly prohibited. On May 18, the Inner Mongolia Development and Reform Commission announced the establishment of a reporting platform for virtual currency "mining" companies. The reporting scope includes four categories: virtual currency "mining" companies; virtual currency "mining" companies that disguise themselves as data centers to enjoy preferential policies in terms of taxes, land, and electricity prices; companies that provide site leasing and other services to companies engaged in virtual currency "mining"; and companies that obtain electricity supply through illegal means and engage in virtual currency "mining" business. A person close to the Inner Mongolia Development and Reform Commission previously revealed to a reporter from The Paper that the current clearance of virtual currency mining projects in Inner Mongolia has achieved remarkable results, which is conducive to the establishment of real data centers in Inner Mongolia and the smooth implementation of carbon peak and carbon neutrality policies. "Local governments have begun to respond to the Financial Committee and have started to give specific implementation details within their own areas," said Wang Zhicheng, associate professor at the Guanghua School of Management at Peking University. Sun Yang, a researcher at Suning Financial Research Institute, told The Paper that the release of the draft opinion means that the regulation of virtual currencies has entered deep waters and has entered a very specific operational level, which fully reflects the country's determination to crack down on virtual currencies. The subject is precise and the punishment measures are clear Dong Ximiao, chief researcher of CITIC Bank and part-time researcher of the Institute of Finance of Fudan University, pointed out that Bitcoin mining is often disguised as "big data projects" to defraud local government support, consume a lot of electricity resources, and is not in line with the goal of achieving "carbon neutrality". He previously stated in the article "It is urgent to rectify the chaos of virtual currency mining and trading" that financial management departments should increase the crackdown on illegal virtual currency mining and trading activities. Bitcoin mining projects should be comprehensively cleaned up and shut down in a timely manner. "The draft for comments fully reflects the resolute attitude of the local government, and the various entities targeted and the corresponding punishment measures are very clear." Financial technology expert Su Xiaorui said. The Draft Opinion proposes policies for eight types of entities that may be involved in virtual currency "mining", including: 1. For industrial parks, data centers, self-contained power plants and other entities that provide venues and power support for virtual currency "mining" companies, in accordance with the "Energy Conservation Law of the People's Republic of China", "Electricity Law of the People's Republic of China" and other relevant laws and regulations, we will strengthen energy conservation supervision and reduce energy consumption budget indicators; for those who deliberately conceal and fail to report, fail to clear and close down in a timely manner, and fail to approve and supervise, they will be held accountable in accordance with relevant laws and regulations and party regulations. 2. For big data centers, cloud computing companies and other entities that engage in virtual currency "mining", the competent authorities will cancel all preferential policies, withdraw them from the Inner Mongolia Power Multilateral Trading Market, and deal with them strictly in accordance with the "Energy Conservation Law of the People's Republic of China" and hold them accountable. 3. For communications companies, Internet companies and other entities that engage in virtual currency "mining", the competent authorities shall revoke their value-added telecommunications business licenses in accordance with the relevant provisions of the "Telecommunications Regulations of the People's Republic of China" and strictly investigate their responsibilities. 4. For Internet cafes and other entities that engage in virtual currency "mining", the competent authorities shall suspend their business and rectify the situation in accordance with the law. 5. For entities such as virtual currency "mining" projects that privately connect to power supply without approval, their illegal electricity theft activities will be transferred to judicial authorities for handling in accordance with the Criminal Law of the People's Republic of China and other relevant laws and regulations. 6. If enterprises, individuals or other entities engage in illegal activities such as money laundering in the form of virtual currency, they shall be transferred to judicial authorities for handling in accordance with the Criminal Law of the People's Republic of China and other relevant laws and regulations. 7. If enterprises, individuals or other entities use virtual currency to engage in illegal fundraising or other activities, the competent authorities shall strictly handle them in accordance with the Regulations on Preventing and Dealing with Illegal Fundraising and other relevant laws and regulations. 8. Relevant enterprises and relevant personnel engaged in virtual currency "mining" will be included in the untrustworthy blacklist in accordance with relevant regulations; public officials who use their official positions to participate in virtual currency "mining" or provide convenience and protection for it will be transferred to the disciplinary inspection and supervision organs for handling. Sun Yang emphasized that "revoke business licenses, punish dishonest persons and refer to judicial authorities are very specific and severe. The use of virtual currencies for illegal fundraising was particularly mentioned." Wang Zhicheng said that banning centralized and professional so-called "mining" is reasonable from any perspective. The draft opinion clearly points out that centralized and professional mining such as "using industrial parks, data centers, cloud computing platforms and power plants" is very accurate. "These people who enjoy preferential policies and use lower electricity prices than ordinary people engage in this kind of cheating, which does not require much technical content, and is an abuse and misuse of the relevant preferential policies of the state, must be stopped. The restrictions in the following articles also have the same purpose. The overall trend and direction is to reduce unnecessary waste of electricity," he said. The ban on mining in Inner Mongolia "has been expected for a long time", and other regions may follow suit. "The ban on mining in Inner Mongolia has been expected for a long time, and corresponding cleanup and rectification work has been carried out before." Su Xiaorui believes. A mine owner in Sichuan also told The Paper: "We actually got the news a long time ago." As early as February 25 this year, the Inner Mongolia Development and Reform Commission issued the "Several Guarantee Measures for Ensuring the Completion of the 14th Five-Year Plan Energy Consumption Dual Control Target Tasks (Draft for Comments)", proposing to comprehensively clean up and shut down virtual currency mining projects, and to withdraw all of them by the end of April 2021, and strictly prohibit the establishment of new virtual currency mining projects. Since then, the virtual currency mining industry in Inner Mongolia has begun to move to Sichuan and other places. On May 18, the Development and Reform Commission of the Inner Mongolia Autonomous Region issued another notice announcing the establishment of a reporting platform for virtual currency "mining" companies. The reporting scope includes four categories: virtual currency "mining" companies; virtual currency "mining" companies that disguise themselves as data centers to enjoy preferential policies in terms of taxes, land, and electricity prices; companies that provide site leasing and other services to companies engaged in virtual currency "mining"; and companies that obtain electricity supply through illegal means and engage in virtual currency "mining" business. In fact, Inner Mongolia, which is rich in thermal power, has always been a gathering place for virtual currency mining farms with high electricity costs. Therefore, Inner Mongolia has always been at the forefront of the regulatory policy on virtual currency mining. Inner Mongolia has always held a crackdown attitude on virtual currency mining. At the end of 2017, the Office of the Special Political Working Group on Internet Financial Risks in Inner Mongolia issued the Notice on Guiding the Orderly Exit of Virtual Currency "Mining" Enterprises in Our Region to the Offices of the Leading Groups for the Special Rectification of Internet Financial Risks in Baotou, Ordos, Bayannur, and Wuhai, pointing out that the virtual currency "mining" industry is a pseudo-financial innovation that has nothing to do with the real economy and should not be supported. Based on this, please take multiple measures, comprehensively adopt measures such as electricity prices, land, taxation, and environmental protection, guide the orderly and rapid exit of related "mining" enterprises, and encourage the transformation to cloud computing supported by the state. However, in this draft opinion, it is packaged that virtual currency mining in cloud computing will also be completely cleared out. In addition, the "2019 First Half of the Year Financial Situation Analysis Report of the Inner Mongolia Local Financial Supervision and Administration Bureau" also clearly stated that it would speed up the withdrawal of "mining" enterprises. In September 2019, the Department of Industry and Information Technology of the Inner Mongolia Autonomous Region announced again that it would clean up and rectify virtual currency mining companies, mentioning that the mining industry is a pseudo-financial innovation that has nothing to do with the real economy and should not be supported. The spirit of cleaning up and rectifying such companies is to orderly withdraw related work. On November 11, 2019, the Department of Industry and Information Technology of the Inner Mongolia Autonomous Region issued the "Notice on the Joint Inspection of the Cleanup and Rectification of Virtual Currency "Mining" Enterprises", requiring the autonomous region's joint inspection team to go to some leagues and cities to conduct a joint inspection of the cleanup and rectification of virtual currency mining enterprises. After Inner Mongolia, other regions may also introduce similar crackdown policies. Su Xiaorui said that when Inner Mongolia banned mining, other regions did not follow up on a large scale. However, the recent mention of "mining" by the Financial Committee may become a signal, and it is not ruled out that other regions will follow up in accordance with the regulatory situation. Wang Zhicheng also believes that many provinces and cities may and should follow suit, especially thermal power areas like Inner Mongolia. "Mining" is contrary to the goals of energy consumption control and carbon neutrality. "Even in hydropower areas, there is surplus electricity only in the flood season. Once mining machines are set up, it is impossible to completely stop them during the dry season. If the period of high coin prices coincides with the dry season, thermal power resources will definitely be occupied," he said. Sun Yang also mentioned that other places will definitely introduce similar policies, but they will be introduced in areas with rich hydropower resources, such as Sichuan, Yunnan, Guizhou, Tibet, Chongqing, Northeast China, and other places, as well as those areas with underdeveloped economies but abundant electricity resources. As early as March, the Sichuan mine owner told reporters that after Inner Mongolia, Xinjiang may also have relevant policies. As for Sichuan, where he is located, he said: "(The policy) will be there and it will be (issued)." |
