Decoding the whole story of the "sudden inspection of virtual currency mines" in Inner Mongolia, which was delayed by 11 days from the original schedule

On November 13, media reported that the Inner Mongolia Autonomous Region Joint Inspection Team went to some leagues and cities to conduct a joint inspection on the cleanup and rectification of virtual currency "mining" enterprises. The inspection period is from November 11 to November 25, 2019.

This inspection took place after the Politburo collectively studied blockchain and the National Development and Reform Commission removed virtual currency mining from the elimination list. People from all walks of life were worried that the policy direction would change, so it attracted widespread attention and discussion. (For details, please refer to "Major policy adjustment! The National Development and Reform Commission removed "virtual currency mining" from the "elimination industry")

Wu Blockchain learned that this inspection is the second follow-up work of the cleanup and rectification of mining companies on August 30. It is not an emergency event and is delayed by 11 days from the original schedule. The inspection will focus on investigating "electricity fee discounts" and "tax evasion" rather than clearing out mining farms.

The second step in the plan

Wu Blockchain exclusively learned that this inspection activity is a follow-up to the "Notice on Inspecting, Cleaning Up and Rectifying Virtual Currency "Mining" Enterprises" issued on August 30, and is not an emergency event.

On August 30, the Inner Mongolia Autonomous Region's Department of Industry and Information Technology, Development and Reform Commission, Public Security Department, Financial Regulatory Bureau, and Big Data Development Bureau jointly issued a document, emphasizing the implementation of the "National Financial Work Conference and the National Internet Financial Risk Special Rectification Working Group Symposium and relevant instructions from the autonomous region's leaders" and requiring the cleanup and orderly exit of virtual currency "mining" companies throughout the region.

On January 2, 2018, the Leading Group of the Internet Finance Risk Special Rectification Office issued a document requiring local governments to guide enterprises under their jurisdiction to orderly withdraw from the "mining" business and report work progress on a regular basis.

The notice obtained exclusively by Wu Blockchain shows that the inspection is divided into two phases. The incident widely reported by the media recently is the second phase. The second phase started 11 days later than the original date. It is impossible to confirm whether it is related to the elimination of mining from the NDRC's industrial catalog:

1: Self-examination stage, from September 3 to September 25, each league and city will form a special report and feedback to the Autonomous Region Department of Industry and Information Technology;

2: Supervision and rectification stage, October 10 to October 30. According to the reported situation, the relevant departments of the autonomous region formed a joint inspection team to conduct supervision and form a report.

Inspection items include: business and tax procedures of the enterprise, whether there is any over-scope operation; tax payment and economic contribution rate from January to June; preferential electricity prices; business scope of the enterprise; approval documents and environmental protection procedures for the enterprise's ongoing projects; whether national network security measures have been implemented; product models and functions of the computer room; whether the computer room security plan is reasonable; fire safety; whether the data center complies with regulations; energy efficiency, etc.

In addition to detailed inspection items, the notice also put forward several requirements: virtual currency mining companies should be included in the list of restricted industries; power departments at all levels should not provide electricity price discounts and subsidies to such companies; approved operator data centers should not operate virtual currency mining or provide convenience, otherwise the preferential electricity price will be cancelled immediately.

Another inspection material exclusively obtained by Wu Blockchain shows that the inspection members mainly come from the Ministry of Industry and Information Technology, but also include employees of Internet security companies such as 360.

We should understand the central government's thinking and not attack emerging industries

After the flood season, miners generally moved to the northern areas with dense thermal power. When miners cheered for the National Development and Reform Commission to remove mining from the elimination list, the inspection in Inner Mongolia dealt a heavy blow to the miners. In fact, due to the tightening of policies in Inner Mongolia in recent years, more mines have been moved to Xinjiang and other places.

However, from Wu's perspective, there is no need to be too nervous about this inspection. First, this inspection is only the second step of the August notice, and it was postponed for 11 days for unknown reasons; second, the inspection content is mainly "restriction" rather than elimination, that is, not providing preferential electricity prices, and checking taxes and fire protection.

Previously, the notice listed the "virtual currency" mining industry in the "restricted industry catalogue", which is also inconsistent with national policies. The "Guidelines for Industrial Structure Adjustment (2019)" released by the Chinese government website did not list it as a restricted or eliminated industry. However, the notice was released before the catalogue.

Premier Li Keqiang once said, "Don't let people say that the government can't keep its hands idle. Whenever something new appears, you have to touch it." Generally speaking, we should still let the market flow and mobilize social creativity, especially when the government's current macroeconomic policy tools are difficult to use, and we should rely more on the market.

To be honest, from the perspective of economy and people's livelihood, the mining industry has only benefits and no harm:

1: According to the research report "China's Energy Outlook 2018-2050" released by the Chinese Academy of Social Sciences,

China's overall energy demand has reached its peak, and further power surplus is inevitable. With an overall power surplus and a large amount of waste and abandoned electricity, how can the mining industry be said to be wasting energy?

2: Energy surplus has led to energy-rich regions gradually falling into debt crisis and poverty. The construction process of large urban agglomerations has caused the Matthew effect, making it more difficult to attract investment in remote areas of the northwest and northeast. If the mining industry is further restricted, it will undoubtedly further hit the local economy and employment situation. (Why not eat meat? Please think about the local areas, central bank leaders)

3: Energy surplus is a global problem. Due to China's restrictive attitude towards the mining industry, China's mining industry has been transferred to Central Asia, Central Europe, the United States and Canada. This is undoubtedly making the already sluggish Chinese economy worse. Do we really have to force miners and mining machine manufacturers to emigrate before we stop?

Therefore, local governments should deeply understand the spirit of the "Guidelines for Industrial Structure Adjustment (2019 Edition)" and, in line with the principle of protecting the economy and people's livelihood, should not impose too many restrictions on emerging industries. In particular, for large-scale mines with very formal taxation and fire protection, the government should provide the same preferential policies in terms of electricity prices, investment promotion, etc., and encourage enterprises to provide more support to the local economy and people's livelihood.

Miners should not overestimate the impact of the Politburo's collective study and the NDRC's catalog adjustment. If virtual currencies are regulated by one bank and three regulatory bodies, and have a conservative attitude, and blockchain is supported by the Ministry of Industry and Information Technology and the National Development and Reform Commission, and has a positive attitude, mining is sandwiched between the two, and even more inclined towards virtual currencies. Industry leaders should strengthen government lobbying to guide the industry towards decriminalization, standardization, and legalization.