Since the meeting of the Financial Stability and Development Committee of the State Council called for "cracking down on bitcoin mining and trading", miners have really panicked and don't know what to do.
Xinhua News Agency commented that to crack down on virtual currency mining, not only does the local government need to take the initiative to issue a document to stop mining activities and cut off the increase; it also needs to introduce comprehensive measures including electricity prices, land, taxation, environmental protection, etc. to promote the orderly quit.
According to data from the Center for Alternative Finance Research at the University of Cambridge, as of May 17, 2021, the annual electricity consumption of global bitcoin "mining" is about 134.89 terawatt-hours (1 terawatt-hour is 1 billion kilowatt-hours of electricity). If Bitcoin mining is regarded as a "country", it ranks 27th in the world's electricity consumption rankings, surpassing Sweden's electricity consumption.
From this point of view, Bitcoin mining has become a "power-swallowing behemoth", which seems to be a burden on the power system.
An industry insider who did not want to be named said that my country’s Bitcoin “mines” account for about 70% of the world’s computing power, and most of them are distributed in Xinjiang, Inner Mongolia, and Sichuan, where thermal power and hydropower resources are abundant and electricity prices are favorable. The global concentration of bitcoin mining.
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Bitcoin mining business is difficult
In recent years, the electricity demand for Bitcoin mining has surged, resulting in a shortage of electricity in some areas. In order to save electricity expenses, "mine owners" migrate like "migratory birds" in pursuit of cheap power resources, forming a scene in the mining circle.
In fact, this is determined by the PoW mechanism. Because of this, Bitcoin mining has been in a "prisoner's dilemma" from beginning to end.
Specifically, according to the algorithm of Bitcoin, its system will automatically adjust the difficulty, so that the speed of block generation is stable at about 10 minutes, and all miners around the world will compete to keep accounts, and the Bitcoin rewards for new blocks will be distributed to successful miners. Accounting node.
For the sake of fairness, the mining pool model distributes the bitcoin rewards after successful bookkeeping according to the proportion of the computing power of the mining machines connected to the mining pool. Therefore, the higher the computing power of the mining machine connected to the mining pool, the more bitcoin rewards will be obtained. Over time, the greater the computing power invested in mining, the more bitcoin rewards you will get. This created the "Prisoner's Dilemma", which made the computing power of the entire network higher and higher, and the power consumption continued to increase, which has also become a point of criticism from the outside world.
Most of my country's bitcoin mines are located in Xinjiang and Inner Mongolia with abundant thermal power resources, as well as in Sichuan and other places with abundant hydropower resources. Since 2017, Bitcoin miners have had a lot of misfortune. They have been frequently affected by factors such as power supply, regulatory policies, and encryption market conditions.
For example, Ganzi, Sichuan is known as the "World Mining Capital" in the mining circle due to its abundant hydropower resources. However, at the end of 2019, Ganzi released the "Garzi Prefecture Actively Doing a Good Job in Power Conservation for Peak Winter" to regulate the shortage of electricity in dry seasons. At the same time, due to the abundance of power resources in the area during the high water season, miners actively participated in the local "consumption demonstration zone" to digest surplus hydropower or even abandon electricity.
In contrast, Inner Mongolia has continued to impose high-pressure supervision on Bitcoin mining. As early as 2018, Inner Mongolia carried out a comprehensive rectification of Bitcoin mines. Last month, the official account of the Inner Mongolia Development and Reform Commission released the "Announcement on Accepting Letters and Visits and Reports from Virtual Currency 'Mining' Enterprises" and the "Inner Mongolia Autonomous Region Development and Reform Commission's Resolute Crackdown on Punishment of Virtual Currency "Mining" Behavior Eighth "Measures (Draft for Comments)" public opinion solicitation announcement. The announcement stated that in order to thoroughly implement the deployment requirements of the "Inner Mongolia Autonomous Region's Several Guarantee Measures for Ensuring the Completion of Energy Consumption Dual Control Targets in the 14th Five-Year Plan", comprehensively clean up and shut down virtual currency "mining" projects, and give full play to the supervision and protection role of the masses. To improve the reporting channels for virtual currency "mining" enterprises, the Autonomous Region Energy Consumption Dual Control Emergency Headquarters Office has specially set up a virtual currency "mining" enterprise reporting platform to fully accept complaints and reports about virtual currency "mining" enterprises. It can be seen from this.
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Water, fire and electricity staged "two heavens of ice and fire"
Recently, Xinhua News Agency kept a close eye on the currency circle and published several articles in succession. Xinhua News Agency pointed out in an article released that to crack down on virtual currency mining, not only does the local government need to take the initiative to issue a document to stop mining activities and cut off the increase; it also needs to introduce comprehensive measures including electricity prices, land, taxation, environmental protection, etc. to promote Existing enterprises exited in an orderly manner. He also believes that high energy-consuming "mines" should not be allowed to occupy valuable resources.
The implication is that power resources should be used on the "knife edge" to promote economic development. In this regard, experts suggest that areas with abundant power resources can establish a multi-dimensional normalized monitoring system such as market access, monitoring of large electricity consumers of Internet companies, and monitoring of abnormal Internet traffic to strengthen source control.
With the word "strict" in supervision, the Sichuan Supervision Office of the National Energy Administration issued a notice on holding a research symposium on virtual currency mining. According to the notice, according to the relevant requirements of the National Energy Administration, in order to fully understand the situation of Sichuan virtual currency mining, our office decided to organize a seminar, which will be held on the morning of June 2, 2021.
Industry analysts said that at the time when the "Sword of Damocles" is hanging high, the conference has become particularly important and has attracted the attention of the entire industry.
According to Jinse Finance, it interviewed a senior miner in Sichuan about the Sichuan symposium. The miner revealed that generally speaking, no news is good news. Today Sichuan is mainly discussing the seriousness and loss of abandoned water from power stations. In addition, the Xinhua News Agency article "orderly exit" also gives a lot of room for imagination. At present, at least based on the actual situation in Sichuan, the wet season can definitely be passed. Of course, there will be a need for cost increases in terms of electricity prices, so it is still certain whether mining can continue and the safety of mining machines.
From this point of view, although the "one size fits all" strict governance has been avoided for the time being, the alarm has not been lifted. Many people in the industry believe that mines that use thermal power are doomed, while mines that use hydropower during wet seasons may survive. Because, on the one hand, my country implements a "one-vote veto" system for environmental protection; on the other hand, the task of achieving carbon peak and carbon neutrality in my country is still very arduous.
According to the data, on December 21, 2020, the State Council released the white paper "China's Energy Development in the New Era", which clearly described China's "road map" for achieving carbon neutrality by 2060. The roadmap is divided into "three steps", that is, from 2021 to 2030, carbon emissions will peak, from 2031 to 2045, carbon emissions will be rapidly reduced, and from 2046 to 2060, deep decarbonization will be achieved to achieve carbon neutrality.
Xinhua News Agency reported that many developed countries have achieved the "decoupling" of carbon emissions and economic growth, but my country is still in the stage of increasing carbon emissions and has not yet reached its peak. Compared with many developed countries, my country has shortened the time from carbon peak to carbon neutrality by several decades.
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Miners "go to sea to make a living"
Under the regulatory crackdown on Bitcoin mining, many mines in China are currently planning to go overseas. Industry insiders commented that following the de-sinicization of bitcoin pricing power, the de-sinicization of mining bookkeeping rights will further de-sinicize bitcoin mining in the future.
According to Xinhua News Agency, a person in the "currency circle" told reporters that recently many "mine owners" have considered shutting down "mines" or moving overseas. They are going to cross the ocean and move the "mines" to Russia, Finland, Canada and other countries where local permits and excess electricity are available.
Edward Evanson from the SlushPool mining pool said that he has recently been contacted by 300-400MW bitcoin mining machines, seeking to place machines in certain areas of North America and the European Union, and some people are planning to ship machines to Kazakhstan . The machines in Xinjiang were transferred to nearby areas in Central Asia. New machines shipped from Bitmain and MicroBT will be shipped to North America. Machines headed to North America often seek traditional data centers with cheap "all-inclusive" hosting prices, as is customary in China.
Edward Evanson said that China's computing power is not declining, but moving. Bitcoin computing power is increasingly distributed globally, reducing attack vectors and allaying concerns about coal energy use in Xinjiang.
"After this wave of regulation, we have made up our minds to transfer the mining machines to a certain country in Europe." A miner who did not want to be named told the Nuclear Finance APP. He said that on the one hand, the abundant water and electricity supply there has reduced mining costs; on the other hand On the one hand, the climate in this area is cold all year round, and the mining machine can cool down naturally in most of the time, which not only reduces the operation and maintenance cost but also helps to extend the life of the equipment.
In addition, a foreign mining machine hosting service provider stated that due to Chinese mining machines going overseas, the company’s mining machine hosting business has been extremely hot recently, and the idle production capacity has been sold out. It is currently actively increasing production capacity to meet customer needs.
At the same time, the "Asian Blockchain Mining Roundtable Conference" will be held in the near future, calling on the industry to cooperate on a global scale to support and promote renewable energy mining. At that time, many people in the industry attended the meeting for the first time to discuss how to better supervise Bitcoin mining, support and practice the concept of "green mining".
Recently, Twitter and Square founder Jack Dorsey said at the Bitcoin 2021 conference in Miami that miners must be profitable, and access to cheap renewable energy can maximize their profits.
