NEO founder comments on regulation and China’s mining crackdown
NEO founder Da Hongfei discusses regulation, mining, altcoins and money laundering.
In an interview with Bloomberg Daybreak Asia, NEO Founder Da Hongfei has expressed support for regulation, saying that the “market has been very hot, very crazy for past year… I think it’s time for regulators to step in”. NEO operates in China, where cryptocurrency exchanges were banned from operating last year.
Despite this stance, he does not expect more regulations to be introduced, saying that the ones in place are already “very strict” and that policy changes in the allocation of subsidies have already affected mining.
China's mining crackdown
Earlier this week it was reported that China plans to discourage bitcoin mining in the country. When asked whether changes in mining were due to increased regulation, Hongfei explained that miners are leaving due to increased scrutiny from authorities, who had previously awarded subsidies on electricity costs, under the belief that miners were performing “cloud computing”. Now that these privileges are lost, mining syndicates are looking elsewhere, with one of the largest firms, Bitmain, moving it's regional headquarters to Shanghai and opening its first subsidiary in Zug, Switzerland.
China lies at the centre of the bitcoin mining ecosystem, where cheap access to hydroelectricity and coal props up mining operations. Over the past month, 80% of all bitcoin mining took place there. Energy bills are estimated to account for 90% of mining operations costs. The access to cheap power is believed to sustain bitcoin’s price and help keep it stable in times of high market demand. The departure of mining syndicates from the country may have an unprecedented effect on the cost of bitcoin, which was trading at $19,609 at the time of writing.
Altcoins and more
Hongfei was asked about his thoughts on the rapid increase of altcoins entering the market. He stated that if the team and technology is really solid and interested in bringing something to the table, then it has a positive effect. However, if the coin exists only to be a vehicle of pump and dump schemes, then it is very negative for the market. The NEO platform allows for the creation of new coins on its network (much like Ethereum) and is projected to host at least 29 ICOs over the coming year.
Altcoins are heavily fuelled by speculation, which causes many observers to be wary of an impending crash. “I think it is possible there will be a crash… I have been in this industry for more than six years, we have seen many crashes, it’s normal”, said Hongfei, who then went on to clarify that if a team is focused on its product, then it will recover.
The interview closed with a decidedly controversial question about the role of cryptocurrency in money laundering, to which Hongfei reasoned that “anything can be used for bad purposes… We need to look at the positive sides. I still believe that blockchain technology has huge potential to change the future of human society, so please focus on the technology.”