Tens of billions of industries are facing bankruptcy. Why did the central bank close the bitcoin mine?

Recently, the news about "China quietly ordered the closure of the Bitcoin mine" spread like wildfire. Some media learned through insiders that the central bank held a closed-door meeting to rectify some mines with irregular electricity consumption.

In fact, the rectification and treatment of mines began last year, especially after the closure of domestic exchanges last year. Relevant regulatory authorities also discussed the issue of mine reservation, but thought that the reasons for closing mines were not sufficient, and these mines did not cause more social problems and the risk points were not clear, so no specific arrangements were made. However, all localities have received "window guidance", that is, local enterprises cannot participate in mining in digital currency.

To understand many policies of China, we must first analyze the logical relations behind them. Originally, the problem of mine disaster has nothing to do with the central bank. This is entirely a local issue, involving the operation and management of the industrial and commercial departments. If it is really necessary to close the mine, it should not be issued by the central bank. Therefore, if this meeting of the central bank mentions the issue of bitcoin mining, then it is definitely not just to study mining.

At the beginning of the new year, the whole macro-policy is implementing new plans, including the central bank's plans on exchange rate and capital account. One of the signals released is that in 20 18, capital control should be strengthened more strictly to ensure the independence of China's monetary policy.

If we want to further strengthen capital control, we must first study what constitutes a potential threat to the capital control policy. At present, the bitcoin generated by mining in China accounts for more than 70% of the global total output. According to the current price, the monthly output of various digital currency in China may exceed 654.38 billion US dollars. This will arouse the vigilance of the central bank and other financial institutions, and the resulting digital currency will have an impact on capital control and capital flow in the international market in some form. In this case, will closing the mine strengthen the effectiveness of capital control?

In fact, mining in China is hardly likely to lead to the loss of foreign exchange reserves, because if domestically produced bitcoins are sold in the international market, they will be converted into US dollars. Even if these dollars stay in the international market and don't come back, it will not cause the loss of China's foreign exchange reserves. Perhaps the biggest problem is that it will lead to the centralized flow of some domestic funds. In fact, this kind of flow is similar to investors putting funds from the real estate market into the stock market, and then returning to the real estate market from the stock market, or circling in China's own fund pool. As long as it does not involve illegal fund-raising and other issues, it is hard to say that it will have a huge negative impact.

However, the overall policy environment in China is changing. If there is a huge asymmetric interest in a market, a large amount of funds will flock to it, which will lead to the impact on other industries. If all kinds of listed companies dig bitcoin, or people are keen to buy mining machines to dig digital currency, then as a government, it will be very worried, because all kinds of strategies to guide investment will fail, which will directly affect some industrial planning and development goals.

Speaking of which, you should know what I mean.

First of all, from the perspective of willingness, the central bank and other relevant institutions are very eager to shut down all kinds of bitcoin and other mines. However, the way, reasons and steps of closure should be considered comprehensively. According to reports, the central bank requires local governments to take measures from energy, electricity and environmental protection to guide bitcoin mining enterprises to reduce their scale. China's central bank also said that it could not directly limit the power supply for bitcoin mining, but only asked local governments to take action.

I really want to shut you down, but the local government needs to find its own reasons. The central bank said that the power of bitcoin mining cannot be directly restricted, but considering the issue of authority, this matter must rely on local governments.

Second, do local governments have the incentive to close mines such as Bitcoin? This must take into account the current policy environment. According to the current policy implementation, local governments may act faster than expected. No local government is willing to bear the name of "supporting bitcoin mines" as long as it knows what this means.

Third, considering the negative impact of the policy, the instructions of the central bank are relatively mild, because this industry was not formed in a day or two, and it covers a wide range. If it is completely closed, there is really no reason. It completely violates the logic of the legal system. If bitcoin is not defined as illegal assets (such as drugs) from a legal point of view, it is difficult to characterize the simple matter of producing bitcoin as illegal. Therefore, the next step is to pay attention to what reasons local governments will find at the specific implementation level.

Fourthly, no matter how we interpret the news of mine closure, we can see the attitude of the government, which needs to be paid enough attention. Even if domestic coal mines cannot be closed soon, hidden costs will increase sharply. The biggest impact may be the relatively large-scale coal mines. If some "typical" mines are not closed, it may lose the significance of issuing policies for policy makers. However, for relatively small mines and various scattered mines organized by retail investors, the impact will not be too great, but the expansion speed will definitely decline.

Fifth, from another news, "At the same time, insiders of the central bank said that the power sector is not encouraged to supply power to coal mines." At present, the guiding policy may be a "qualitative" policy. By qualitative, I mean the matter of closing the mine, which may have been decided. The word "discouraged" is a warning to the power sector. At the same time, it also shows that it is very difficult to completely close the mine. First of all, the central bank itself cannot put pressure on the power sector. You know, those big miners buy hundreds of millions of kilowatt-hours of electricity at one time, which does not give much support to one side's economy.

Of course, just like the closure of the Bitcoin exchange, the closure will not happen overnight, which is enough for the market to issue various interpretations, but I can only tell you that the attitude of the central bank and others has been very clear. It is easy to close the mine, but it is difficult to stop the trend.

Personally, the focus of my thinking is not whether the mine is closed, but how to understand the mining.

Mining, in fact, is that computers use their maximum computing power to find some data, which can be compared to finding a gold in a pile of sand. If the sand pile is bigger, it means that mining is more difficult. Therefore, the so-called mining is actually a super-large-scale calculation by computer, which can be used for mining, scientific calculation and various research.

It's only 300 years since mankind invented electricity, but its application has been expanded. I don't know how many kinds there are. From replacing the steam engine, to lighting, to information transmission and so on. What is the most efficient application of electricity at present?

If it is a country with very scarce electricity, electricity will be used to produce very necessary supplies to meet the needs of transportation and government. What will electricity do if it is a relatively rich country? For example, singing KTV, street neon lights, large amusement parks and so on. In fact, the application of electricity is enough to judge the economic development level of a country or region.

In 20 16, China ranked first in the world in power generation, accounting for 25% of the world's total power generation. In this case, according to common sense, China's mining power is indeed the most abundant, especially with the decline of China's economic growth, the wasted power resources are also increasing.

The electricity in the power station cannot be stored, but it can be stored if it is converted into digital currency. In fact, if all the surplus electricity produced in China can be converted into bitcoin for storage, it should be the most efficient production and operation mode. It is equivalent to using electricity to produce US dollars, and it is the processing export mode with the highest added value.

In addition, according to historical development, most of the electricity in the future may be consumed by computers. This is my judgment, and our generation can testify. In human daily life, the proportion of electricity consumption will be lower and lower. In the future, mankind will solve various problems in a digital and blockchain way, and "mines" will only increase, not decrease. Especially with the development of artificial intelligence, space exploration and other fields, the demand for computing power will increase exponentially.

Electricity is just a kind of energy, just like people. The place that really consumes most energy is not the limbs, but the brain. The human brain is a machine that works 24 hours a day. A thinking person's brain consumes 75% of blood sugar stored in the liver every day, and oxygen consumption accounts for 20% of the whole body's oxygen consumption. The more the brain thinks, the more glucose its neurons need.

When the electric light was invented 200 years ago, people thought that the best use of electricity was to light the light bulb. Where the electricity will be most effective in the future should be decided by the market.

No one can see electricity. So far, it is difficult for many people to understand the mystery of its existence, but electricity has changed the world. Many virtual things are often more influential than physical things. I think it is difficult for many people, including the government, to understand what "digital assets" mean to China and the world. What we need to reflect on is, besides the four great inventions of electricity, electric light, telephone, computer and digital currency, how many are being invented by China?

When a phenomenon appears, we must study the background and logic behind it. The future competition can be said to be military competition, economic development competition and financial competition, but it can also be said to be the competition of thinking and computing power. It is easy to close the mine, but it is difficult to stop the trend.