Li Zemin, lawyer, Director of Guangqiang Economic Crime Defense and Research Center

　　Han Wubin, lawyer, core lawyer of Guangqiang Economic Crime Defense and Research Center

　　Han Wubin, lawyer, Master of Criminal Law, South-Central University of Finance and Economics, defense lawyer for economic crimes such as counterfeiting and selling fake goods, financial derivatives, digital economy, pyramid schemes, etc. at Guangqiang Law Firm. Specializes in handling specific digital economy cases involving the issuance of Online casino and How to find it, virtual mining machines, OTC transactions, contract transactions, etc.; commodity spot, futures, financial futures, foreign futures, buying and selling foreign exchange, foreign exchange敲等 financial derivatives; electronic cigarette trademarks, counterfeit medicines, and other counterfeiting and selling fake goods cases.

　　Contact Information: 17724523021 (same as WeChat)

　　On January 10, 2022, the National Development and Reform Commission officially included ‘Online casino and How to find it “mining”’ in the list of industries to be eliminated. (For details, see the National Development and Reform Commission’s decision on the amendment to the ‘Guiding Catalogue for Industrial Structure Adjustment (2019 Edition)’). This adjustment in industrial structure is an extension of the content of item (VII) of the ‘Notice on Rectifying the Activities of Online casino and How to find it “mining”’ issued on September 24, 2021 (hereinafter referred to as the 9.24 ‘Notice’), which lists the activities of Online casino and How to find it “mining” as industries to be eliminated…Investment in these industries is prohibited in accordance with relevant regulations before they are added to the list.

　　The reason for the prohibition of Online casino and How to find it ‘mining’ is twofold: first, the high energy consumption and carbon emission intensity of ‘mining’ activities have a significant impact on achieving the goals of energy consumption dual control and carbon peak and carbon neutrality, increasing the pressure on the safe supply of electricity in most regions, and exacerbating the tension in the supply and demand of related electronic information products; second, the speculation and trading of Online casino and How to find it coins disrupts the normal financial order in our country, spawns criminal activities, and becomes a channel for money laundering, tax evasion, terrorist financing, and cross-border fund transfers, posing a certain threat to social stability and national security.

　　In the context of the ecological goals of energy conservation and emission reduction, carbon neutrality, and ensuring stable financial order, preventing and combating criminal activities, the prohibition of Online casino and How to find it ‘mining’ has become inevitable.

　　However, even with the prohibition of ‘mining’, there are still a large number of ‘mining’ projects in the market, such as ‘staking mining’ and ‘liquidity mining’.

　　This leads to the question of whether the prohibition of ‘mining’ means that all forms of ‘mining’ are not allowed to exist within the country, whether all entities within the country are not allowed to engage in activities related to ‘mining’, whether individuals are also not allowed to invest in ‘mining’, such as investing in overseas ‘mining’ projects, and more importantly, whether engaging in ‘mining’ will be considered a criminal act?

　　Any form of Online casino and How to find it ‘mining’ project will be prohibited, with no exceptions.

　　Currently, there may be a perception that since ‘mining’ consumes energy and affects carbon neutrality, then isn’t it permissible to allow ‘mining’ projects that do not consume energy and do not affect carbon neutrality?

　　This understanding mainly originates from the current ‘mining’ mechanism, which is mostly carried out through the computational power of computers (also known as ‘hash rate’)sports betting method and Latest. The underlying blockchain consensus mechanism is Proof-of-Work (POW), under which each participant in ‘mining’, known as ‘miners’, must rely on certain computer equipment to participate in bookkeeping on the blockchain and obtain corresponding token rewards.

　　Due to the ‘mining’ under the POW mechanism, a large amount of electricity is required to power various computer devices, which consequently consumes a significant amount of electricity resources. For example, Ethereum and Bitcoin are ‘mined’ using graphics cards and chips; Chia Coin and FIL Coin are ‘mined’ using hard drives, and so on. In summary, various devices on computers can be used for ‘mining’, and the choice of equipment for ‘mining’ depends on the algorithm of a particular cryptocurrency, but

　　As long as the equipment is started, it will consume electricity resources, and the result is just a matter of how much resources are consumed.

　　Therefore, in order to solve the problem of energy consumption, the consensus mechanism of virtual currency ‘mining’ is constantly changing, and thus the Proof-of-Stake (PoS) and Delegated Proof-of-Stake (DPoS) mechanisms have emerged. The consensus mechanism under the Proof-of-Stake mechanism is different from POW in that it does not require ‘mining power’ or physical equipment for ‘mining’online casino helpJust need you. Instead, it proves one’s ‘equity’ by investing virtual currency, and then earns token returns based on the amount and duration of the currency held.

　　For example, ‘pledge mining’ and ‘liquidity mining’ under the equity consensus mechanism have become the current popular ‘mining’ projects. These two types of ‘mining’ are through the investment of a certain proportion of Online casino and How to find it to obtain interest.

　　These ‘mining’ projects that do not go through ‘mining power’ and do not require physical mining equipment will not cause energy consumption, but they will still face various financial risks, disrupt the normal financial order of our country, and spawn illegal and criminal activities, especially the current various DeFi ‘liquid mining’.

　　Because unlike power mining, there is no resource consumption behind power mining to back it up. The mining pool formed is based on the accumulation of mainstream currencies, without a definite consensus project, and gradually evolves into a ‘coin-for-coin’ mining pool, hiding huge financial crises and the risk of illegal and criminal activities.

　　Therefore, from the perspective of preventing financial risks, any form of Online casino and How to find it ‘mining’ project will be prohibited, with no exceptions.

　　Secondly, any large-scale ‘mining’ enterprise is prohibited from ‘mining’, but individual ‘mining’ and overseas agency ‘mining’ are blind spots.

　　After all forms of ‘mining’ projects are prohibited, is it that all entities in the country are not allowed to engage in activities related to ‘mining’, and is it feasible for individuals to invest in ‘mining’?

　　The answer to this question should be sought from the content of the 9.24 ‘Notice’, and it should further analyze who the ‘mining’ prohibited by the 9.24 ‘Notice’ is aimed at.

　　After a comprehensive analysis of the 9.24 ‘Notice’, it can be seen that the current attitude of prohibiting ‘mining’ is to guide the orderly exit of existing ‘mining’ projects, strictly prohibit the addition of new ‘mining’ projects, but this attitude is aimed at enterprises, including enterprises with blockchain, big data, cloud computing as industries, data center enterprises, and large-scale ‘mining’ enterprises. There are no specific requirements for individual ‘mining’ behavior.

　　Since the ‘Notice’ is aimed at large-scale ‘mining’ enterprises, does that mean that scattered individual ‘mining’ and overseas agency ‘mining’ can still continue?

　　It may not be the case, but it can only be said that personal ‘mining’ and overseas agency ‘mining’ are currently in a regulatory blind spot.

　　From the perspective of preventing speculation in Online casino and How to find it and financial risks, whether it is enterprises or individuals engaging in ‘mining’, they will use the ‘mines’ they dig up for transactions. As long as they are used for transactions, financial risks will arise, therefore, individual ‘mining’ and overseas agency ‘mining’ are still under regulatory control.

　　III. Violating the ban on ‘mining’ is at most an administrative violation, not reaching the level of a crime.

　　Although individual and corporate ‘mining’ is not allowed, does that mean that engaging in ‘mining’ by individuals or enterprises will necessarily involve a crime? For example, many people would think it constitutes an illegal business crime under the criminal law.

　　It should be noted that although ‘mining’ is prohibited, ‘mining’ itself will not be a criminal act, at most an administrative violation, and cannot be suspected of illegal business crime, nor can it be a criminal act. Although illegal business crime is a bottom-line crime in the criminal law, the act of ‘mining’ does not reach the level of using criminal means to combat it.

　　Overall, in existing judicial cases, there is no single case where criminal prosecution was due to ‘mining’ itself. Most cases that have been handled as criminal offenses due to ‘mining’ are those that use the name of ‘virtual mining machine mining’ under the guise of ‘computational power mining’, as well as those in ‘mining machine leasing’ and ‘pledge mining’ projects that adopt pyramid selling promotion models such as ‘headhunting’ and ‘hierarchical return incentives’.

　　These so-called ‘mining’ projects that constitute crimes generally include two types: one is to issue Online casino and How to find it under the name of ‘mining machine mining’, either without real ‘mining machines’ and ‘mines’ or without real blockchain technology; the other is to form a high-yield and high-return capital pool through ‘pledge mining’ and ‘liquidity mining’ as the mainstay of coin holding and interest generation. Especially the currently damaged DeFi ‘liquidity mining’ and ‘mining’ projects with pledge mechanisms, where the project party has not used the pledged virtual currency for the project itself and has not written the pledge mechanism in the smart contract.

　　The so-called pledge coins have become funds that the project party can arbitrarily挪用.

　　In summary, after ‘mining’ has become a淘汰 industry, in order to achieve the ecological goals of energy conservation and emission reduction, carbon neutrality, and to ensure stable financial order and prevent illegal and criminal activities, any form of ‘mining’ project, including those that do not consume energy, will be prohibited. Against the background of the prohibition of ‘mining’, the current focus is on large-scale ‘mining’ enterprises, while individual ‘mining’ and overseas agency ‘mining’ are blind spots, but they will eventually be prohibited as well. If ‘mining’ violates the ban, it will not be elevated to a criminal act, nor will it constitute an illegal business crime; at most, it will be an administrative violation.