A hot virtual currency "digital game" is impacting the financial order and industrial resources in the real world.
In the past few days, the prices of Bitcoin and other virtual currencies have soared and plummeted. At the same time, following the introduction of OTC trading and futures contract trading product services by virtual currency exchanges, various so-called "financial management", "lending" and "fixed income" products around virtual currencies have also continued to emerge. These are similar to traditional finance but are not The virtual currency "financial services" provided by licensed institutions are unprecedentedly popular.
In addition, "mining", the original method of directly obtaining virtual currency, has also become the focus again. In the past few years, the “mining machines” that have been closed in the bear market have turned into sweet pastries again, and some A-share listed companies have invested tens of millions of dollars to deploy the coin mining market. Under the competition for computing power between major mining pools (collection of computing power) and mining farms (collection of hardware equipment), not only chips, hard disks, graphics cards and other resources are quickly swallowed up, but also power resources such as firepower and water power in various places are also annihilated. In the sound of the rumbling of the mining machine.
An "involved" coin mining market is having a serious impact on the real world...
Crazy hype: The virtual currency expands wildly
The "rise" of financial derivatives in the currency circle began with the upsurge of opening virtual currency exchanges around 2015. The virtual currency-related derivatives launched by virtual currency exchanges mainly use futures-like contract trading methods to go long or short virtual currencies and other virtual currencies.
But what followed was the supervision of the continued high-pressure control of virtual currency transactions, including the 2017 Central Bank and other seven ministries strictly banning the issuance of virtual currency funds and closing domestic virtual currency exchanges.
Under continuous supervision, a number of virtual currency exchanges have gone underground and are quite "low-key". However, since 2021, after the price of Bitcoin has continuously exceeded the $50,000 and $60,000 mark, the platforms called "digital financial service providers" have been unable to hold back, and they have been launched online without regulatory approval. High-profile solicitation.
"China Business News" reporter obtained a virtual currency trading platform leaflet from the offline promotion channel, showing that it provides financial services such as investment and wealth management, leveraged trading, and lending around virtual currencies, including DeFi mining, debt, and options And other multi-asset portfolios.
Different from the simple contract trading in the past, the virtual currency trading platform uses dual currency financial management, pledge lending, zero interest lending, funds, and current deposit services as the grounds to absorb the virtual currency in the hands of users. Virtual currency is the underlying investment to generate interest or borrow for consumption".
In its claimed lending business, its principal and interest are priced in USDT (a currency that links virtual currency to the legal currency U.S. dollar). Users pledge virtual currency to borrow money. Borrowing purposes include the purchase of mining machines, daily consumption, Decoration, tourism, medical treatment. The reporter checked the loan agreement and found that it was an overseas company that signed the loan contract with the user.
Regarding the aforementioned business content, lawyer Peng Kai, a senior partner of Beijing Jincheng Tongda (Shanghai) Law Firm, told reporters, “First of all, this is a lending business, and it is a cross-border lending that bypasses foreign exchange regulation and involves financial affairs. Licensing (lending business qualification) and foreign exchange supervision. Secondly, USDT is used for decoration and daily consumption. This kind of borrowing is unimaginable and self-deceptive. Domestic life consumption scenes such as decoration and tourism can only use domestic legal circulation Fiat currency."
When talking about the boundary between this kind of money-raising behavior and illegal fund-raising, Peng Kai bluntly said that there is no boundary between the two, trying to bypass the legal currency through "currency transaction" to achieve the purpose of not involving the transaction of legal currency. This is unrealistic. From the source point of view, the virtual currency held by the vast majority of people is purchased through legal currency instead of original acquisition such as mining. It is naive to hope that the "coin-to-coin transaction" will achieve a detour from the criminal regulation of fund-raising.
"In addition, it should be noted that most of these exhibitors are currently established overseas, but there are'branches' in the country. This'branch' may be a newly established company, or it may be an office location and an office without a corporate entity. The obvious purpose of opening such a “branch” in China is to develop business for domestic customers. This kind of approach is the same as that when ICO moved overseas, but the business targets are still mainly for domestic people.” Peng Kai added.
Scramble for turf: capital rushes into the coin mining market
As this “financial” game of chasing wealth is intensifying, the price of a bitcoin on the secondary market has reached several hundred thousand yuan. As a result, the "mining" operation located at the top of the virtual currency industry has naturally entered the public eye.
As we all know, the key to mining virtual currency is calculation speed, referred to as "computing power". That is, if you have more powerful and advanced hardware than others, and low and stable electricity, you can allocate more virtual coins. The amount of computing power is directly proportional to the probability of miners (investors) successfully mining new coins.
Under the temptation of a virtual currency of hundreds of thousands of yuan, "mining machines" have become the best choice for capital and public companies to rush into this virtual currency game. First, A-share listed companies invested tens of millions of dollars in cloud mining, which was cited by the "mining circle" as a typical case of circumventing supervision, and then there were US stocks listing the entire industrial chain of "mining" by issuing additional stocks and cash. company.
"We have spent hundreds of millions of yuan to deploy many hydropower mines, and have also acquired manufacturers that have developed 7-nanometer'mining machine' chips, and are racing against time to buy a large number of second-hand'mining machines'." A source from the investment department of a listed company told reporter.
However, such an investment is not a big deal in the Bitcoin mining industry.
"This is one of our mines in Hami, a prefecture-level city in the Xinjiang Uygur Autonomous Region." The founder of a mining pool took out a photo and said. The spacious square in the photo has a capacity of 120,000 kilowatts, if the price is 500 yuan per kilowatt. , The construction cost of this mine plus the cost of electricity requires 60 million yuan. If the top-end "mining machine" is filled (filled up), it costs 2 billion yuan, and the almost (relatively small) "mining machine" needs 500 million to 1 billion yuan.
Wang Peng, an assistant professor at Renmin University of China, pointed out, “In the field of virtual currency mining such as Bitcoin, there are strict requirements on computing power and algorithms, and the update and iteration speed is fast. The advantage is lost within a short period of time, and the degree of wear and tear of the machine is high. The operation of the “mining machine” business needs to maintain a relatively good performance in the field of “mining” for a long time to be able to mine new coins to cover the cost and Get income."
Wang Peng also emphasized that in addition to financial strength, there is another barrier to entry into the "mining" industry-the control of the supply chain. For example, Wang Peng said that the current Bitcoin market is booming, and capital is eager for professional "mining machines", and companies all over the world who are interested in investing want to buy professional "mining" equipment. "Whether a company can purchase and acquire computing power equipment in the fastest time directly determines its revenue. At the same time, the cost of the'mining' industry will become higher and higher, which will force the'mining machine' to increase Iterate within a short period of time, and the input costs will also rise."
"Everything depends on the price of the coin. If it reaches 100,000 US dollars or one million US dollars, the competition for mining will only become crazier." Industry insiders said.
Fierce competition: Controlling Industrial Resources
It is obvious that this fierce competition has not yet come to an end, and the carnival of catching up with me and ebb and flow has begun to have a huge impact on the industry.
"Our company can't buy graphics cards anymore, and we can't receive them at twice the original price. The supplier said they were all ordered by the virtual currency mining machine manufacturer." A game company's purchaser asked the reporter: Bitcoin is not A bunch of codes? Why do the invisible and intangible things in these virtual worlds squeeze industrial resources?
On February 9, data from the China Association of Automobile Manufacturers showed that in January, the production and sales of automobiles were 2.388 million and 2.503 million respectively, a decrease of 15.9% and 11.6% from the previous month. The association reminded that production has declined rapidly compared to the previous month, reflecting that the insufficient supply of automotive chips has affected the production rhythm of enterprises.
In stark contrast to the worries of the gaming and automotive industries, mine owners are somewhat pleased with the shortage of chips. In their eyes, the shortage of chips in the world is good for "mining", and "mining" can make money as long as the computing power does not rise in the bear market. "Now the entire production line of car companies has stopped production due to a few chips, but we have mining machines (not short of chips), and we can always make money." A mine owner said.
"At that time, everyone was not optimistic about XX coins, just our family (optimistic), so we hoarded a lot. Now everyone thinks that the bull market is coming, and they are swarming to mine coins. Of course, they are doing everything possible to harvest the'raw materials' of the mining machine. , The gross profit of the mining industry is more than 200%, (graphics cards, hard drives, chips), we calculate the shutdown price of Bitcoin mining machines (mining machines that specialize in mining Bitcoin) (the income cannot cover electricity bills and hardware costs) at 20,000 USD/piece Or so, now the price of Bitcoin is 50,000 US dollars per coin, what price we can't afford?"
Just after chips were out of stock and the price of graphics cards as the "raw material" of mining machines skyrocketed, hard drives were also doomed. "The hard drives are directly supplied by the manufacturer, and they are available in stock. The order is placed on the day of the payment."-This is an advertisement of the mining pool in the circle of friends.
Recently, the "mining" of Chia coins has suddenly become popular, using idle hard disk storage space instead of graphics card computing power for "mining". Due to the large-capacity read and write involved, the greater the storage space users use for "mining", the greater the probability of obtaining native token rewards, leading to higher hard disk prices. In mid-March, the Chia mainnet went live (the mainnet means that the blockchain project opened the blockchain to the public and began to use it on a large scale), and the sales of large-capacity hard drives on major domestic e-commerce platforms surged. But after the price rose sharply, the price fell sharply, which trapped a lot of "miners" who were hoarding goods.
According to media reports, with the enthusiasm for Chia coin mining, the prices of hard disks and SSD solid-state drives have seen skyrocketing prices in the short term. "The price of 8T (hard disk) has reached 1,730 yuan, and it changes every day, reaching 2,999 yuan at the previous highest."
With the soaring prices of "raw materials", power supply companies and chip manufacturing companies that originally supplied other companies in the industry chain are also vying to cooperate with mining machine manufacturers that can offer high prices.
According to the reporter's incomplete statistics, there are currently more than ten listed companies in the domestic A-share market that have begun to provide services or output products for virtual currency mining machines, and many of them have already appeared in the top five customers of virtual currency mining companies.
In addition, the data centers are inevitable. Earlier, there was a data center announcement stating that the company's cloud host must not engage in activities that violate national policies and regulations. Because Bitcoin mining has not been recognized by relevant national laws and regulations, mining will also cause a lot of loss of hardware resources, which will affect the cloud. The stability of the server, in order to ensure the stable operation of the user's cloud server and avoid the legal risks caused by this, please do not use the company's cloud host to engage in related activities. If found, it will be closed directly and no refund will be given.
High energy consumption: devouring natural resources
Electricity is more important to the "mining" industry than raw materials. Mines filled with the roar of machines consume huge amounts of electricity.
According to the "mining machine" manufacturer, the electricity consumed by virtual currency mining in 2020 is equivalent to the total electricity consumption in Thailand in 2020.
Bitfawn’s statistics on the scale of power consumption for virtual currency mining show that from 2013 to 2021, ASIC (application-specific integrated circuits) mining power consumption was 1.8 billion kWh, 2.3 billion kWh, 5.4 billion kWh, 13 billion kWh, 41.5 billion kWh, 55.3 billion degrees, 71.3 billion degrees, and 137 billion degrees. From 2017 to 2021 GPU (a more powerful "graphics processing unit", usually used for games and 3D rendering) mining electricity consumption were 6.2 billion kWh, 16.9 billion kWh, 7.9 billion kWh, 9.1 billion kWh, 20.1 billion degrees (Note: 0 degrees in 2016 and before).
"What is the local electricity price?" A VC investor in the currency circle mysteriously asked the local urban investment company that is attracting investment. When she received a reply of 0.26 yuan per kilowatt-hour, she said to reporters with a little excitement but some worry: “If the local government disagrees, it can only dig secretly, which is too unstable.”
In fact, local regulatory authorities have begun to be vigilant about this type of investment. On December 24, 2019, the People's Government of Ganzi Tibetan Autonomous Prefecture, located in the western part of Sichuan Province, issued the "Work Plan for Cleaning Up Bitcoin Mines in Ganzi Prefecture."
At the end of February this year, the Development and Reform Commission of the Inner Mongolia Autonomous Region issued the "Several Safeguard Measures for Ensuring the Completion of the Energy Consumption Dual Control Targets during the Fourteenth Five-Year Plan Period (Draft for Comment)," and proposed that virtual currency mining projects should be fully cleaned up and shut down before the end of April.
In the context of the policy withdrawal, mining farms may choose to continue to "mining" secretly, or they may choose to move to areas where the attitude of Bitcoin mining in China is not yet clear, and even declare that they will "go out to sea". Although the choices are different, their immediate goals are surprisingly consistent-racking their brains to attract investment. They have repeatedly emphasized that "almost no retail investors can make money now, and retail investors invest their money in the mines to specialize and scale their operations. They invest funds in the early stage and pay dividends during the contract period." What's more, it claims that it is absolutely safe to provide this kind of computing power splitting service for domestic A-share listed companies.
“Choosing domestic commercial banks’ operating loans, credit loans, or mining machine loans in the currency circle to buy mining machines is relatively less risky than speculation. Or, borrowing money from relatives and friends for mining is also a good choice.” At a "mining" conference, the reporter saw that the founders of mining pools encouraged "miners" to borrow money to start mining coins.
"90% of people who speculate in coins lose money, and speculation in coins is equivalent to online gambling and drug use, and mining machines have compliance contracts and value-added tax invoices, which are more compliant..." People in an industry composed of machine manufacturers can be said to brainwash investors over and over again. However, as for the investment disclosure issues, authenticity issues, and the risks of illegal fund-raising under this direct fund-raising mining model, no one has ever actively mentioned it to investors who are ready to move outside the circle.
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