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Investigation of virtual currency chaos: mining consumes a lot of energy and prices skyrocket



Plunging 30% overnight, the price of a month is almost "cut in half", and those who liquidate their positions are empty-handed... Recently, the prices of virtual currencies such as Bitcoin have skyrocketed and plummeted, causing onlookers to exclaim and investors to lament. From mining to trading to financing, the "currency circle" is full of chaos, and supervision and rectification have been dealt with heavily. Investors should stay away from virtual currency trading hype.

On the desolate river bank, in a simple factory building made of steel pipes, color steel plates and other materials, nearly a thousand computer mainframes are running at high speed on rows of large iron shelves, emitting waves of heat, and the fans are buzzing.

If it is not a local, few people know that this is a bitcoin "mine". The car delivering meals to the "miners" departs from Guzan Town, Kangding City, Sichuan Province every day, and it takes more than half an hour to get there after walking a section of dirt road that is not on the map.

There are not a few "mines" hidden in deep mountains and valleys like this in western Sichuan. The "mine owners" are eyeing the cheap hydropower resources here. Many of them are engaged in Bitcoin mining under the name of "water and electricity consumption" and under the guise of "data center".

Golden Morning News | Five ministries and commissions in Inner Mongolia issued a notice to clean up and rectify virtual currency mining: 1.28 Bitcoin mining companies in Kyrgyzstan are facing suspension of power supply.

2. The difficulty of the entire Bitcoin network has been raised to a record high.

3. Coinbase announced that it will list Dash next week.

4. The five ministries and commissions of Inner Mongolia issued a notice to clean up and rectify virtual currency mining.

5. The French exchange Coinhouse suffered a hacker phishing attack and has switched to maintenance mode to protect user funds.

6. Smart contract pioneer Nick Szabo: Saying Libra is a cryptocurrency is like saying a doll is a baby.

7. Libra Association COO: Libra reserves will not exceed 200 billion US dollars at most, and US dollars are expected to account for half.

8. Susquehanna Director of Digital Assets: The industry has not yet addressed the US SEC's concerns about Bitcoin ETFs.

9.CryptoTrader.Tax CEO: There is a problem with the IRS’s use of the information return form 1099-K as a tax basis. [2019/9/15]

"Where the electricity price is cheap, we will go there." A "mine owner" told reporters that he usually digs in western Sichuan during the spring and summer wet season, and in winter he "moves" to Inner Mongolia, Xinjiang and other places to continue digging with thermal power .

Voice | Wang Yongli: The exchange link between virtual currency and legal currency should become the focus of financial supervision: According to the Economic Observer, Wang Yongli, the former vice president of the Bank of China, recently issued a document stating that online virtual currencies such as Bitcoin can be used in their online communities , but should not be circulated outside the online community. For the exchange of virtual currency and legal currency, all public trading platforms should establish a real-name system for legal currency wallets (accounts), as well as a system for household owners and platforms to regularly report changes in legal currency accounts to regulatory authorities. Should be the focus of financial regulation. Publicly raising funds (including ICO) or conducting futures transactions with virtual currencies must meet the management requirements for public funds or futures transactions. Violations of law and discipline, such as financial fraud using virtual currency or commercial tokens, must be severely cracked down. [2018/9/15]

Although Bitcoin is a virtual commodity, it is time-consuming and labor-intensive to obtain a Bitcoin. It needs to be continuously calculated by a computer according to an algorithm, commonly known as "mining". There are "mining machines" specially used to mine bitcoins on the market. Some people buy "mining machines" on a large scale to form "mines" and "excavate" day and night...

Executives of Mizuho Group: The possibility of Mizuho handling virtual currency is not completely absent: Mr. Kosuke Saito, senior strategy officer of the Digital Innovation and Blockchain Strategy Department of Mizuho Financial Group, the second largest financial institution in Japan, said that although Mizuho is currently directly accepting virtual currency Currency transactions and settlements are not yet available, but the possibility of dealing with virtual currencies is not completely absent. [2018/6/5]

"As bitcoins are mined less and less, operating a 'mine' will face higher capital investment and a longer payback period." A "mine owner" told reporters that in the past, dozens or hundreds of units were purchased. Entering "mining machines", there are now thousands of them at every turn. Some "mines" consume millions of kilowatt-hours of electricity a day, and many use electricity directly from hydropower stations.

There was also a "mine owner" who proudly told reporters that the annual power consumption of his "mine" somewhere in the southwest was equivalent to the total annual power consumption of three cities.

Industry insiders said that not only Bitcoin, but with the continuous advent of virtual currencies such as Ethereum and Dogecoin, the power consumption of the entire virtual currency mining is exploding, and most of these "mines" are concentrated in my country. It will put enormous pressure on energy supply.

Japan Financial Services Agency's Third Virtual Currency Exchange Industry Research Conference: At the Japan Financial Services Agency's third virtual currency exchange industry research conference, Mr. Miyake Koji, Director of Financial Research at Mizuho Research Institute, focused on "Japan's retail payment and blockchain technology trends" " gave a speech. Mr. Miyake first elaborated on the current retail payment industry situation, type, application situation and tendency in Japan, and then explained the possibility and possible model of using blockchain in the retail payment industry. In the final outlook, he said that building a data sharing platform is very important for future development, and he looks forward to more applications of blockchain technology. [2018/5/22]

Virtual currency is called "currency" but it is not a real currency. It cannot be used as currency in the market, let alone speculative transactions. However, driven by interests, some people still take risks and turn a blind eye to the false asset risks, business failure risks, and investment hype risks of "currency circle" transactions.

——The "banker" set up a game to manipulate the price. According to industry insiders, most virtual currencies, including Bitcoin, have a huge number of holders, and it is not difficult for them to manipulate market prices.

"Taking a certain currency as an example, the top 10 holding addresses own nearly 40% of the circulating tokens. As long as the huge number of holders have the same goal, it is very easy to manipulate the price." The person in charge of a virtual currency overseas trading platform revealed to reporters that 5 On March 19, the currency’s biggest drop exceeded 50%, which was less than one-third from the previous highest price point, and many investors suffered heavy losses.

——Returning the soul from the corpse, "air coins" have been banned repeatedly. Under the heavy blows of the policy, the initial coin offering (ICO) in China has almost been eliminated, but many platforms have transferred transactions to overseas platforms, but the main battlefield for issuance and publicity is still in China, and they are trying to bypass the risk control of domestic financial institutions to recharge trade.

"Recently, Dogecoin has skyrocketed. I think people have a soft spot for coins with animal names, so they invested in Shiba Inucoin. It has risen more than 20 times in just a few days, but the price has plummeted recently, and almost all profits have been given up." Investor Liu Peng said.

Instigated by this blind investment mentality, more "air coins" with strange concepts began to emerge, such as cat coins, pig coins, and eel coins... These "air coins" that have no real support and no application value, once the trend Retiring will bring huge losses to investors.

——Leveraged trading magnifies investment risks. In the violent market fluctuations of virtual currencies, many investors have increased their leverage and tried to "turn a bicycle into a motorcycle", but the result is that they often lost their money.

In January this year, Mr. Zhou entered the currency circle with 500,000 yuan of funds, and within a few months his book funds rushed to 3 million yuan. Recently, Bitcoin has plummeted again and again, and at the worst time, he faced losses of tens of thousands of yuan every few minutes. Unwilling to lose his funds, Mr. Zhou put all his eggs in one basket and increased leverage to buy the bottom, but unexpectedly, the Bitcoin plunged again and triggered a liquidation, and all 3 million yuan was quickly "evaporated".

According to the transaction data provided by the third-party platform, as of 15:00 on the 25th, in the past 24 hours, more than 140,000 people have liquidated their virtual currency leveraged transactions, with an amount of 4.641 billion yuan. On the night of the 19th, the liquidation amount exceeded 40 billion yuan.

Relevant departments in our country have long been aware of the risks brought about by the hype of virtual currency transactions, issued early warnings, and introduced several measures to rectify them.

In 2013, the People's Bank of China and other five departments jointly issued the "Notice on Preventing Bitcoin Risks", requiring all financial institutions and payment institutions not to conduct business related to Bitcoin. In 2017, the central bank and other seven departments stopped all kinds of token issuance and financing, and carried out special rectification. Subsequently, my country's virtual currency trading platforms and ICO trading platforms basically achieved risk-free exits, and the global proportion of bitcoin traded in RMB fell to less than 1%.

Despite this, some people are still waiting to see and maintain the operation of the "mine"; some virtual currency trading platforms can still bypass the risk control of domestic financial institutions and perform operations such as recharge, cash withdrawal, and purchase.

Recently, there has been a rebound in virtual currency trading hype. The China Internet Finance Association and other relevant associations jointly issued an announcement to remind them to guard against the risk of speculation in virtual currency transactions. On May 21, the 51st meeting held by the Financial Stability and Development Committee of the State Council clearly proposed to crack down on Bitcoin mining and trading.

"The next step should be to take targeted measures to carry out centralized rectification of virtual currency mining and trading activities." Dong Ximiao, chief researcher of China Merchants Union Finance, suggested that, on the one hand, local governments should stop companies involved in mining and cut off the increase. Comprehensively adopt measures such as electricity prices, land, taxation, and environmental protection to promote the orderly exit of existing mining companies. On the other hand, institutions and platforms that illegally participate in virtual currency transactions, hype, or provide support services should be dealt with in a timely manner in conjunction with the judicial department, increasing the cost of violations of laws and regulations, and increasing the deterrent effect of rectification.

Experts said that virtual currency is by no means a "one-stop" investment product, and virtual currency transaction contracts are not protected by law. In the face of repeated reminders and admonitions from relevant departments, investors should increase their risk awareness, stay away from virtual currency trading hype, and protect their "money bags."


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