Sichuan Provincial Financial Office said that the local government's policy to attract miners may fail

Last week, Sichuan Province's favorable policies in the field of cryptocurrency attracted widespread attention. In April, Ganzi Prefecture and Ya'an City in Sichuan Province combined their own hydropower advantages to promote the integration of the blockchain industry and develop the mining industry, and successively issued preferential policies to attract miners.

On April 14, Ganzi Prefecture held the highest-level "Blockchain Industry Development Seminar", defining "crypto mining" as a "green emerging industry" and providing policy support in electricity, finance, taxation, financial services, etc. The People's Government of Ya'an City, Sichuan Province also issued the "Implementation Opinions on Building a Hydropower Consumption Demonstration Zone to Support the Development of the Blockchain Industry", announcing the first batch of "Hydropower Consumption Demonstration Enterprises", among which many mines were listed. This may be the first time in 18 years that a local government has issued a document to support mining during the flood season.

However, recently, there have been reports that the Sichuan Provincial Financial Office has explicitly required the withdrawal of virtual currency mining companies . This notice will undoubtedly have a huge impact on the local economy and miners.

It is reported that as early as April 29, the Office of the Leading Group for Financial Work in Sichuan Province issued the "Notice on Guiding Enterprises to Orderly Exit Virtual Currency "Mining" Activities". The notice stated: Due to the recent rebound in foreign virtual currency trading prices, some companies have gone to wind power and hydropower areas under the banner of "blockchain" or high-tech industries to engage in "mining" activities. At present, some companies are promoting virtual currency "mining" activities as part of the country's encouragement of the development of the blockchain industry, attracting investors to follow suit, and hiding major risks such as investment speculation, illegal fundraising, and pyramid schemes. The notice requires the rectification offices of all cities (prefectures), especially those in Ganzi, Ya'an, Leshan, Aba, Liangshan and other areas with abundant hydropower resources, to strengthen risk investigation, stop the investment promotion of suspected "mining" companies, and actively coordinate with the Development and Reform, Economic and Information, Market Supervision, Taxation and other departments to comprehensively adopt mandatory measures such as power supply, electricity prices, land, taxation, and environmental protection to promote the orderly exit of existing companies from mining activities.

It is reported that Muli County has responded to the policy call and issued a "Notice on Reporting Virtual Currency "Mining" Activities" on May 21, which pointed out:

It is prohibited to add new virtual currency "mining" projects. From the date of issuance of this notice, all hydropower generation enterprises in our county shall immediately stop the investment promotion of virtual currency "mining" activities and shall not add new virtual currency "mining" projects. Otherwise, our bureau will recommend that the county people's government investigate and deal with illegal construction projects, and take administrative measures such as abolition, fines, and orders for self-demolition, until the case is transferred to the People's Court for compulsory execution.

As we all know, Sichuan is rich in hydropower resources and has a natural advantage in the field of mining. It provides an excellent choice for mining companies with large electricity demand. It can be said to be the center of the world's mining field. The emergence of the withdrawal policy will make it impossible to exert this advantage. According to the requirements of the Sichuan Provincial and State documents, it is imperative to orderly withdraw from virtual currency "mining" activities, and the impact will also be multifaceted.

Impact on economic development

The notice specifically targets areas with abundant hydropower resources, such as Ganzi, Ya'an, Leshan, Aba, and Liangshan. The rich hydropower resources are due to the special geographical environment. However, the geographical environment also naturally limits the types of industries, making the economic development of these areas relatively backward. The outbreak of the epidemic has made the economy of various regions even worse. The "mining" industry can bring profits without causing environmental pollution, and can support the economy while taking advantage of the inherent advantages of various regions. However, the issuance of the notice has undoubtedly cut off the "road to wealth" in various regions.

Hindering people's livelihood

The economic recession has affected people's livelihood the most. With the reduction of jobs under the epidemic, employment has become the primary issue in the field of people's livelihood. Judging from the content of this year's government work report, maintaining employment is a top priority. The previous "six stability" and "six guarantees" have made stabilizing employment and protecting residents' employment as the top priority. The Sichuan Financial Office's policy of promoting enterprises to withdraw from mining activities will undoubtedly affect the employment of local residents in the fields of electricity, mines, etc. Although it is conducive to governing the chaos in the industry, it is not conducive to achieving the original intention of protecting people's livelihood.

It should be noted that in the Notice on Preventing Bitcoin Risks issued by my country in 2013, while defining Bitcoin as a virtual commodity, it denied the legal status of Bitcoin as equivalent to currency and prohibited Bitcoin from circulating in the market as currency. However, the law does not prohibit the legal possession and normal circulation of Bitcoin, nor does it prohibit mining. Therefore, mining itself is not illegal.

At the same time, Bitcoin has shown good safe-haven properties this year. With the third halving, people's confidence in Bitcoin has increased greatly. Sichuan's use of its own hydropower advantages to engage in mining is also a good thing in line with the trend of economic development, and has received support from local governments. However, the attitudes of governments at all levels are not unified, and there is no stable opinion on how to achieve effective supervision of the mining industry. Therefore, there is still a possibility of repeated policies in the future, and miners should be mentally prepared.

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