Many people still think of cryptocurrency "mining" as the "living by the water and grass" of the Bitcoin era - relying on wind power in the northwest in winter and hydropower in the southwest in summer. Thousands of machines are stuffed into iron houses in the desert and built by the rivers in Sichuan, roaring day and night, and consuming electricity like mountain torrents.
But the reality is that what is more common in the industry now is a kind of "light mining": it does not rely on hydropower, does not go deep into the mountains, but runs a few devices quietly in city office buildings, without the roar of fans, and without the smell of burning circuit boards, but just "calculates" silently and produces tokens silently.
Because of work, lawyer Honglin often deals with Web3 project parties, developers, and investors in Shanghai and Shenzhen. Many familiar friends will take me to visit their offices and point to a pile of hardware machines to introduce to me, saying that this is our cryptocurrency mining farm.
Outside the room is China's most centralized financial center, with a lot of traffic. Inside the room, you can't hear the sound, and you can't feel the heat change. The machine is running, supporting decentralized finance and dreams.
This "light mining" method is actually a state that has evolved naturally under the high pressure of supervision in the industry in recent years. On the one hand, it is subject to policy risks, and large-scale deployment has long been unsustainable; on the other hand, as many new projects abandon the Bitcoin-style PoW route and turn to lower-power PoS, distributed storage, and edge computing mechanisms, the physical form of mining itself has become "invisible".
From a compliance perspective, this is actually a typical "unclear" state - the equipment is compliant, the network is compliant, and the running of the node itself is not illegal, but its revenue method and incentive logic do belong to the category of cryptocurrency. If you say this is not mining, it seems that you can't completely deny it; if you say it is illegal, it lacks the characteristics of substantial illegality. This gives the industry a subtle living space: it continues to operate in the gray area, not big or small, not noisy or noisy, but it is indeed alive.
To truly understand this reality, we have to start with China's regulatory path for "mining".
As early as May 2021, the Financial Stability and Development Committee of the State Council clearly stated in a meeting: "We must crack down on Bitcoin mining and trading behaviors." Since then, a systematic "mining cleanup" campaign has been launched across the country. Traditional "mining areas" such as Xinjiang, Inner Mongolia, and Sichuan took the lead in responding, and successively issued power restriction notices and cleared mines. In September of that year, the National Development and Reform Commission officially included "virtual currency mining activities" in the "elimination category" of the "Guidelines for Industrial Structure Adjustment", and the policy direction has been established since then.
The official reason given is that such activities have "high energy consumption, high carbon emissions, and low contributions", which are not in line with national industrial policies and "dual carbon" goals. This characterization had a certain realistic basis at the time. At that time, the PoW mechanism dominated by Bitcoin was indeed a representative of high energy consumption and high density. Its electricity consumption once surpassed that of some medium-sized countries, and much of this electricity came from "gray" power sources.
However, with the evolution of industry technology, many encryption projects no longer rely on PoW algorithms, but use PoS, DPoS, distributed storage and other methods for network maintenance. The computing resources required in this mode are significantly reduced, and the deployment scenario has gradually shifted from "suburban iron houses" to "urban office buildings". You can say it is mining, but it does not consume much electricity.
What's more complicated is that the development of AI and the sharp increase in computing power requirements have turned some of the underlying facilities that originally belonged to the encryption industry into "policy encouragement objects". Edge computing power, distributed storage, general-purpose GPU nodes, these technologies once belonged to the infrastructure of blockchain applications, and are now being taken over by the AI industry. At the level of computing power and architecture, the boundary between the two is not clear at all - you may use the same set of servers to run an AI training model and a chain verification node, but the software and targets called are different.
This leads to a very realistic problem: the identification logic that regulators are used to using, such as "whether the power consumption exceeds the standard", "whether the equipment is special", and "whether it is deployed in a centralized area", is almost ineffective today. You can't tell which project is engaged in legal AI computing business, which project is using a shell to mine tokens, and which project is doing both. Reality has long smoothed the regulatory boundaries.
So many times, what we see is not "mining is resurrecting", but "it is not dead at all, it just changed its clothes". You will see many Web3 projects, which are mainly AI collaboration and edge node scheduling on the surface, but are actually running the verification logic of a certain chain when they are implemented; some projects are actually building their own token issuance mechanism in the name of data security and encrypted computing.
For local governments, this situation is also tricky. On the one hand, the central government has explicitly banned "mining", while on the other hand, it has focused on supporting "computing infrastructure" and "AI large model training". If a project's business model steps on two lines at the same time, there is actually no clear answer as to whether to support it, how to supervise it, and whether it is considered a violation.
This vague state has further led to many projects in reality "running when they can and hiding when they can", which has given rise to a more hidden, mixed, and flexible "underground mining ecosystem". You can't check it, and you can't calculate it clearly. The electricity is for residential use, the house is an office, the accounts are compliant, and the entity has a license, but it is just counting a token. At this time, if you use the traditional regulatory logic to deal with it, it can no longer keep up.
As a legal compliance practitioner in the Web3.0 industry, Honglin's personal judgment is: Among China's "three bans" policy on cryptocurrency (ICO, cryptocurrency exchanges, and cryptocurrency mining), if there is room for relaxation in the future, the first thing to be relaxed may be "mining."
It is not because the country's attitude has changed, but because "new miners" have deviated from the original definition. It is difficult to describe them as "high energy consumption and low contribution". On the contrary, they may have been the "computing entrepreneurs" you encouraged, receiving subsidies from science and technology parks, participating in AI competitions, and seriously registering companies, paying taxes, and paying wages, but the profits generated are not only RMB, but also global universal and cashable tokens. What's more, AI and Web3 are increasingly integrated, and many chain teams are actually participating in AI model pre-training, data annotation or algorithm optimization; and many AI companies have also realized that the on-chain incentive mechanism is more efficient in "crowdsourcing computing" and "edge participation". At this time, if you force the relationship between Web3 and computing power to be split, it will only become more and more unrealistic. Of course, I am not saying that supervision should be completely relaxed, but we must admit that the form of this industry has indeed changed, and we can no longer use the standards of three years ago to govern the reality of five years later. Especially when it comes to "fuzzy areas" such as computing power infrastructure and AI service capabilities, what should be done may not be a total negation, but through the "positive list + industry classification" method, it is clear which behaviors should be classified as data industry, which behaviors are subject to financial supervision, and which behaviors can be operated in compliance but must be registered and declared.
Otherwise, if we always equate the word "mining" with illegality and backwardness, we will indeed miss part of the future.
Today, mining is not only a compliance issue, nor is it just an energy issue, but also a question about "how do we understand the evolution of infrastructure". From Bitcoin's "computing power for blocks" to the "computing power as resources" in the AI era, what we essentially see is that more and more underlying computing power nodes are becoming universal interfaces for the digital society. If the past decade was "whoever can mine coins makes money", then the next decade is likely to be "whoever masters elastic computing power will have the initiative in the industry."
In this era of increasingly fierce competition for computing power on a global scale, if China cannot build a mining and computing power integration mechanism that respects the underlying technical path and can be included in the regulatory vision, we are likely to be absent from the next wave of global computing power infrastructure competition.
Rather than blocking it, it is better to see its true face; rather than hiding it, it is better to include it in the open rule system. This will at least allow those projects that could have done things in the sun to have fewer concerns and less motivation for gray operations.
This is a new issue that really needs to be discussed.
Jasper
Hui Xin
Joy
Jixu