Jiang Zhuoer: Stability overrides everything
The highest and most fundamental purpose of governance is to maintain social stability, which is to say, "stability overrides everything."This article was published on Jiang Zhuo'er's personal account.
Learning the most basic knowledge of ZZ is very beneficial for investment
The highest and most fundamental purpose of regulation is to maintain social stability, which means "stability overrides everything." As long as society is not chaotic and everyone is working, whether they earn more or less, or lose more or less, is only temporary. Before 1994, the market was chaotic, with various ICOs and tokens flying everywhere. If no action was taken to stop it and it was allowed to develop, the inevitable result at the end of the bull market would be a large number of retail investors going bankrupt, leading to social instability. Therefore, regulation intervened, requiring the cessation of ICOs, the refund of issued ICOs (at private placement prices), and further demanded the closure of Chinese exchanges.
These measures were all carefully considered. Sufficient time was given for a soft landing for exchanges, ensuring the safe refund of user assets. At that time, some said that after the state closed the exchanges, it would confiscate "illegal" bitcoins (there were similar rumors when OKEX stopped withdrawals), which clearly showed a lack of understanding. Regardless of the status of bitcoin, confiscating so many people's coins would create social instability, so it was absolutely impossible.
The regulation of ICO issuers further illustrates this point. Originally, ICOs could be classified as illegal fundraising under the law, but if enforced this way, ICO issuers would definitely flee, and it would be impossible to refund the money, leading to users losing their investments, which would also create social instability. Therefore, the final handling measure was: as long as ICO issuers refunded the money at the private placement price, there would be no further investigation.
So, do you understand? The handling of exchanges and ICO issuers is all about maintaining stability above all else, primarily ensuring that participants do not lose money and do not cause social stability issues. Even if ICO issuers might involve illegal fundraising, for the sake of stability, as long as you refund the money, you won't be arrested.
Many participants in ICOs bought coins on the secondary market at much higher prices, so refunding at the private placement price still results in a loss. Why does regulation require refunds at the private placement price? Because ICO issuers definitely received money at the private placement price (various expenses in between are not within the scope of regulatory consideration), and they can basically refund at that price. Therefore, this is the greatest common divisor for stability. If higher prices were required for refunds, ICO issuers who couldn't refund might simply run away, leaving users with nothing, which would create instability.
Therefore, the regulatory measures have been deeply considered and largely take practical effects into account. Both the 94 and 521 announcements were released on Friday nights. The requirement for exchanges to close and the notice of closure were issued on the evening of September 15 (Friday):
521 was also at 10 PM on a Friday. Why Friday night? Because if the goal is to suppress bubbles, issuing notifications on Friday night has the best effect. Banks basically do not operate on Saturdays and Sundays, especially European and American banks, which are completely closed on weekends. Therefore, institutional investors from Europe and America cannot enter the market, which is why Xiao Han would say, "Tonight (Sunday night) is the hardest."
- Returning to mining, there are two points everyone agrees on regarding the crackdown: one is to combat various funding schemes masquerading as mining (especially IPFS funding schemes targeting the elderly), and the financialization of cloud computing power (which could lead to "individual risks being transmitted to the social domain"), and the second is the carbon neutrality goal.
However, the advantage of mining is that it is a physical industry, binding a large number of physical resources, employment, and electricity. BTC mining produces 900 BTC a day, with an annual output value of 100 billion. Adding ETH, mining in China has at least an annual output value of 100 billion, with hundreds of thousands of jobs in related upstream and downstream industries. Mining is a magical industry that turns wasted water and electricity into gold and foreign exchange, with zero pollution and zero emissions.
At that time, even the exchange refunds were given a few months, let alone the refunds for the physical industry of mining. Even if a one-size-fits-all approach is needed, a longer refund period must be given; otherwise, mass unemployment, losses, and bankruptcies of local power grids and power plants would also be unstable factors.
For example: many hydropower consumption parks in remote areas of Sichuan are local poverty alleviation projects. These parks promote local employment and contribute income and GDP to local power stations, power grids, and governments. Poverty alleviation is a battle task personally deployed and commanded by the top leadership, achieving complete victory. If the hydropower consumption parks are closed, leading to local poverty, who will bear the responsibility? This actually needs to be considered from the grassroots level: which choice has a smaller impact on social stability?
Furthermore, if large mining farms are shut down, since mining is not illegal, the mining machines will inevitably flow into more individual hands, and the bitcoin mining industry will return to the state of 2014-2015 ------
Small miners will set up a few mining machines at home,
Medium miners will find a warehouse to set up dozens of mining machines, or find a factory to set up hundreds of mining machines,
Large miners will find a remote small hydropower station where electricity cannot be sold, setting up one or two thousand mining machines.
At the end of 2013, when I first entered the cryptocurrency space, I bought two graphics card mining machines to mine at home. Why was I willing to set up two mining machines at home? Because at that time, a mining machine could earn three to four thousand a month. For most families, having two mining machines at home generating a few thousand extra income each month is a very welcome thing.
Moreover, those who believe that mining machines will become worthless and be sold as scrap metal do not have market economic knowledge. The only factors determining the price of mining machines are the price of coins and computing power. Even without considering the situation of mining machines going overseas, as long as home miners can still mine, setting up two mining machines at home generating a few thousand yuan a month means that mining machines will not become worthless, but will have a reasonable price that matches the mining output.
A mining machine is a spark that can spread across the fields, allowing hundreds of thousands, even millions of families to join the mining army. What does this mean for financial stability? Mining is the best advertisement for bitcoin. Many who do not believe in bitcoin may participate and believe in bitcoin because of mining, further expanding the group of cryptocurrency traders.
Of course, some may say that regulation could directly declare bitcoin mining illegal, or even holding bitcoin illegal, and that would be fine. But in reality, it is unlikely that regulation would do this. When the state strongly promotes blockchain and when European and American bitcoin exchange Coinbase is compliant and listed, saying that trading cryptocurrencies may lead to financial risks makes sense, but a blanket ban on holding bitcoin is highly unlikely.
