Interpreting Inner Mongolia’s crackdown on mining “new eight” reveals what information?

Inner Mongolia’s policy is more detailed, but the impact on the market is small, the follow-up of important ministries and important provinces if the introduction of relevant policies, may cause a greater impact.

On the evening of May 25, Inner Mongolia made the first shot.

According to the official public number of the Inner Mongolia Development and Reform Commission, it was proposed that in accordance with the 51st meeting of the Financial Stability Development Committee of the State Council on the deployment requirements of combating bitcoin mining and trading, the strict implementation of the “Inner Mongolia Autonomous Region on ensuring the completion of the “14th Five-Year” energy consumption double control objectives and tasks of a number of safeguards”, to further clean up virtual currency “mining” behavior, strengthen the crackdown and discipline, build a long-term regulatory mechanism, maintain the market order, big data industry environment and prevent financial risks, we organized the drafting of the Inner Mongolia Autonomous Region Development and Reform Commission on the resolute crackdown and discipline of virtual currency “mining” behavior. “Eight Measures on Behavior of Virtual Currency “Mining” (Draft for Public Comments)”, which is now open for public comments.

First, the industrial parks, data centers, self-provided power plants and other entities for virtual currency “mining” enterprises to provide sites, power support, according to 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, increase energy-saving monitoring efforts, reduce energy consumption budget indicators; the existence of deliberate concealment, withdrawal and shutdown is not timely, approval and supervision is not effective, according to relevant laws and regulations and party regulations to seriously pursue accountability.
Second, for large data centers, cloud computing enterprises and other subjects with virtual currency “mining” behavior, the competent departments to cancel all kinds of preferential policies, withdraw from the multilateral trading market of electricity in Inner Mongolia, according to the “Energy Conservation Law of the People’s Republic of China” to deal with strictly, seriously held accountable.
Third, the communication enterprises, Internet enterprises and other subjects have virtual currency “mining” behavior, according to the “People’s Republic of telecommunications regulations,” the relevant provisions of the competent departments shall revoke the value-added telecommunications business license, seriously held accountable.
Fourth, the Internet cafe and other subjects have virtual currency “mining” behavior, by the competent departments in accordance with the law on its suspension and rectification and other disposition.
Fifth, the unapproved private access to power supply virtual currency “mining” projects and other subjects, according to the “Criminal Law of the People’s Republic of China” and other relevant laws and regulations, its illegal power theft shall be transferred to the judicial authorities.
Sixth, enterprises, individuals and other subjects in the form of virtual currency money laundering and other illegal acts, according to the “Criminal Law of the People’s Republic of China” and other relevant laws and regulations, according to the law referred to the judicial organs to deal with.
VII. For enterprises, individuals and other entities using virtual currency for illegal fund-raising and other acts, according to the “Regulations on Prevention and Disposal of Illegal Fund Raising” and other relevant laws and regulations, the competent departments to deal with strictly.
Eight, the existence of virtual currency “mining” behavior of the relevant enterprises and related personnel, in accordance with the relevant provisions into the blacklist of bad faith; public officials take advantage of their positions to participate in virtual currency “mining” or to provide convenience and protection, all transferred to the discipline inspection and supervision organs.

How to interpret.

First, Inner Mongolia is the first to issue a document, with the previous consistent attitude of cracking down on mining. Compared with the content issued by the Inner Mongolia Development and Reform Commission in February, it is significantly more detailed. Inner Mongolia is the most aggressive in combating mining due to the pressure of carbon neutrality and energy anti-corruption.

At that time, the content was only: “Virtual currency mining: comprehensive cleanup and shutdown of virtual currency mining projects, all out by the end of April 2021. Reasonable and orderly control the scale of data center construction, and strictly prohibit new virtual currency mining projects.”

This time the requirements are basically in the existing system of laws and regulations, the restrictions on mining to the extreme. It even involves Internet cafe mining, the inclusion of the blacklist of untrustworthy and other previously unseen content. However, there is really no way to comply with individual mining, so it is not covered.

Reference to Inner Mongolia’s proposed cryptocurrency mining cleanup Carbon Neutral Commitment to Mining Geometry?

Second: The introduction of the policy in Inner Mongolia could potentially mean that Beijing is letting localities and ministries introduce their own policies with their own landings according to the situation, rather than being ordered by the NDRC/Energy Bureau, which might not be a bad thing. As well as the large number of references to legal provisions in the content, highlighting the need to follow the law. However, the subsequent policies of the central bank, the Ministry of Public Security, Sichuan and Xinjiang are of greater concern.

At the central bank level, it is not expected to deviate from the content of the previous three associations: China Internet Finance Association China Banking Association China Payment Clearing Association on preventing the risk of speculation in virtual currency transactions. The Sichuan water harvesting period is approaching and the abandonment of water and electricity is serious. From the perspective of solving financial difficulties, eliminating abandoned electricity and boosting employment, local governments should be reluctant to clear out immediately.

The uncertainty of the other two is greater. In particular, it is not known whether there will be a severe crackdown on OTC. But if there is a new policy ramped up, the first thing that will probably happen is the downgrading of the OTC business of the major exchanges. But from another perspective, if the reason for cracking down on coin-related fraud and gambling business, it may be more beneficial to the police to have the assistance of the exchanges. A full-scale move underground after the abolition of OTC makes it more difficult for the police to make arrests.

Bitcoin prices did not fluctuate after the introduction of the Inner Mongolia policy, but that doesn’t mean it’s over. This is partly because of the shouting effect brought by Dalio, and partly because the market has digested the 521 scare last weekend. But as mentioned before, the policies of the four ministries and provinces mentioned above will have an even greater impact.

Third: What is certain is that 521 has already brought far-reaching effects to China’s mining industry, and it should be a probable event that the whole Chinese cryptocurrency industry will come out of overseas or go underground at least this year. It is reported that overseas mines have been severely oversupplied recently, with all Russian mines full and electricity prices in Kazakhstan rising by 40%. An overseas mine operator said that no one asked for help before, but in the recent week almost the phone was broken.