How does the virtual currency mining circle deal with the crisis of being eliminated?

"In their eyes, our industry is very backward."

The issuance of the National Development and Reform Commission's "Guidelines for Industrial Structure Adjustment (2019 Edition, Draft for Comments)" has pushed "Bitcoin mining will be eliminated" to the tenth place on the hot search list.

From the outside, this is a fatal blow to cryptocurrency mining.

China has almost monopolized the global Bitcoin mining machines, and in this market, Chinese sellers have absolute say.

How will miners and mining machine manufacturers respond to the industrial structure adjustment announced by the National Development and Reform Commission?

Mining machine manufacturers may expand into other industries

On April 8, the National Development and Reform Commission issued the "Guidelines for Industrial Structure Adjustment (2019 Edition, Draft for Comments)", which listed "virtual currency mining activities" as industries that have been explicitly eliminated or immediately eliminated by national industrial policies. The period for soliciting public opinions is from April 8, 2019 to May 7, 2019.

Among them, the obsolete industries mainly include backward processes, technologies, equipment and products that do not comply with relevant laws and regulations, do not have safe production conditions, seriously waste resources and pollute the environment and need to be eliminated.

“This news has been widely circulated recently, and we have also received many inquiries from foreigners.” Huang Ming (pseudonym), an insider of BitMicro, was full of worry when he mentioned the announcement of the NDRC.

MicroBit mainly produces Shenma mining machines.

A 2017 CCTV investigation stated that 70% of the world's bitcoins were mined using Chinese electricity.

Data from 2018 shows that the world's top three cryptocurrency mining machine manufacturers are all founded by Chinese, with Bitmain, Canaan Creative and Ebang International accounting for more than 90% of the global market share.

China has almost monopolized the global Bitcoin mining machines, and in this market, Chinese sellers have absolute say.

The release of the guidance catalogue for industrial restructuring has forced users at home and abroad to worry about the subsequent development of the mining machine industry.

Although the National Development and Reform Commission is currently soliciting public opinions, Huang Ming is rather pessimistic.

He believes that the government holds the right to make active choices, while mining machine manufacturers are in a passive position of choice. However, in the end, the arm cannot bend the thigh, and mining machine manufacturers can only respond to policies.

"The issuance of the NDRC's announcement will affect customers' determination and decision-making, and will ultimately directly affect mining machine manufacturers," said Huang Ming.

Tianyancha shows that MicroBT completed its Series A financing on April 24, 2018.

According to insiders, MicroBT has been raising funds since the second half of 2018.

The document from the National Development and Reform Commission is not good for MicroBT’s financing.

“Policies will be considered before large capital investments are made, and those who have not yet invested will wait and see. The reduction in new funds and insufficient infrastructure will restrict the development of mining machinery.” Li Feng, who used to be a mine owner, believes that the issuance of this announcement by the NDRC is extremely unfavorable for mining investment.

Mining machine manufacturers have a single business, and their fate depends entirely on the sales of mining machines, and the price of mining machines fluctuates greatly with the price of coins. This is the direct reason why Bitmain, Canaan Creative, and Ebang International have been unable to go public.

"Depending on the policy space, we may eventually develop other industries and engage in chip design fields that meet national requirements." Huang Ming believes that the NDRC's adjustment of the industrial structure is only part of the government policy. The industry's supervision has never been relaxed, and more restrictions may appear in the future.

Huang Ming said that currently MicroBT can only wait and see and then change direction.

Among them, a mining machine manufacturer said:

First, the policy is similar to the consistent policies of the National Development and Reform Commission and the Economic and Information Commission since 2013, which are to control and clear out mining companies. However, there are too many local and departmental interests involved, so it is impossible to implement it thoroughly.

Second, virtual currency mining can generate economic benefits from abandoned water and electricity. I think both the National Development and Reform Commission and the Ministry of Industry and Information Technology have a certain understanding of this. Therefore, Yunnan, Guizhou and Sichuan rarely propose a comprehensive withdrawal. At present, the only thing that should be withdrawn is highly polluting thermal power.

Miners' Petition

“If what is said in the announcement comes true, all the mines will have to be demolished,” Li Jin (pseudonym) told Shenlian Finance.

Li Jin has mines in Sichuan, Yunnan, Inner Mongolia and other places, but the scale is not large. Regarding the announcement of the National Development and Reform Commission, Li Jin seemed a little anxious, but if it really came true, worrying is useless.

Li Jin told Shenlian Finance that after the NDRC’s announcement, the miners all reported the situation on the NDRC’s website.

The following is the feedback from miners in the group. Li Jin said that everyone’s opinions are similar:

Feedback

Deepchain Finance summarizes the following three points:

1. Cryptocurrency "mining" can consume abandoned electricity on site, help hydropower companies turn losses into profits, and does not damage the environment;

2. Mining machines are chip products. Different chips are produced under different algorithms, which can improve chip manufacturing;

3. For elimination, it is suggested that restrictions could be imposed on mines with high emissions from thermal power generation, while hydropower should be encouraged.

But some miners reacted very calmly to this.

"This is just a draft opinion, don't take it too seriously." Miner Wang Fan (pseudonym) told Shenlian Finance that he was not in a hurry at all.

Wang Fan’s mine is built in Xinjiang and uses thermal electricity.

Wang Fan believes that if all the mining farms in China are shut down, then Bitcoin will be finished.

Previously, documents targeting cryptocurrency mining have also been issued.

In January 2018, the Internet Finance Risk Special Rectification Office (the leading group of the Internet Finance Risk Special Rectification Office) stated that "virtual currency mining" companies, while consuming a large amount of resources, also contributed to the speculation of "virtual currency" investment. Two requirements were put forward for virtual mining machine mining:

First, actively guide enterprises under your jurisdiction to exit the "mining" business in an orderly manner, and actively coordinate with relevant departments under your jurisdiction to take multiple measures, including comprehensive measures on electricity prices, land, taxation, and environmental protection, to guide relevant enterprises to exit in an orderly manner.

Second, in order to keep abreast of the progress of work in various regions, local rectification offices are required to report relevant information on "mining" enterprises within their jurisdiction before the 10th of each month.

In the second half of 2018, the Xinjiang Uygur Autonomous Region Economic and Information Commission issued a "Notice on Clearing Out Illegal Electricity-Using Mining Enterprises."

The notice requires that the responsible entities for clearing out the illegal electricity usage "mining" enterprises are power generation companies, and the clearance of illegal electricity usage "mining" enterprises must be completed before August 30, 2018.

The scope of clearance includes: 1. "Mining" enterprises that use electricity illegally and fail to go through the procedures of business registration, tax registration, social security and five insurances in accordance with national laws and regulations; 2. "Mining" enterprises that use electricity illegally and fail to sign electricity contracts with local power supply companies.

Choose to go abroad

"Everyone in the industry is worried, but if it really has to be eliminated there is nothing we can do about it. We can only move it overseas." Zhang Qiang (pseudonym) owns a large-scale mine in Sichuan.

Regarding the NDRC announcement, Zhang Qiang believes that the government wants to fundamentally eliminate mining, and believes that mining, apart from utilizing energy, cannot bring positive impacts to the domestic economy and employment.

When the National Development and Reform Commission issued an announcement and everyone was worried that the cost of moving overseas would be too high, Zhang Qiang said that he was fully prepared and could now go directly to Kyrgyzstan to set up a mine.

In 2018, Zhang Qiang and his partners went to Kyrgyzstan for inspection, obtained an annual electricity price of around 0.2 yuan, and established a small-scale mine there.

The mine has been in operation for a year. Zhang Qiang said that the cost of transferring overseas is indeed slightly higher, but it is more stable than domestic electricity.

According to the miners, the miners are currently mainly distributed overseas in Kyrgyzstan, Kazakhstan, Malaysia, Bhutan and other places.

"The impact is not significant at the moment, but will be significant in the future." Li Feng, who used to be a mine owner, believes that this policy is difficult to implement in practice and currently has little impact on miners.

In 2019, miners are preparing for the arrival of the flood season.

"A mining farm with about 200,000 machine positions has been built", "300,000 loads attract investment of 12 million", "6,000 S9s for personal use, need spot goods, please contact me if you have any"......

Similar lively investment promotion information has been going on in the mining circle for more than three months, but the policies of the National Development and Reform Commission have cast a shadow on the prospects of some mines.

Li Feng believes that the government has misunderstandings about this industry and hopes to change the current situation through communication.

On the other hand, Li Feng also agrees with the decision of the National Development and Reform Commission, hoping to clean up the amateur players in the circle. In Li Feng's eyes, the amateurism of the mine owners is reflected in: poor risk control awareness and weak continuous learning ability.

Regarding the development of overseas mines, Li Feng suggested giving priority to Europe, Canada and the United States, and also noted that:

First, do not build mines in places like Africa, where the business environment has no legal protection;

Second, do not build mines in areas where there are political conflicts.