Suspension of currency withdrawals, why did Binyin suddenly encounter a liquidity crisis?

On September 6, Biyin announced the suspension of BTC and ETH withdrawals; the market’s previous speculation that Biyin was in a liquidity crisis was further confirmed. What does Biyin’s latest announcement contain, and what is its purpose? Why did the mining pool giant suddenly suffer a run? When did the currency printing crisis start? What gave Biyin a fatal blow? Under the liquidity crisis and redemption crisis of Biyin, can Biyin survive?

Biyin is in an emergency and announced the suspension of currency withdrawals

On the evening of September 6, Biyin officially issued the latest announcement. Judging from the intention of the announcement, the main purpose is Suspending the risk of runs also shows that Biyin's funds are already running out of money. The following article explains the main content of its announcement:

1. Biyin Mining Pool will provide all customers who are mining BTC and ETH (the same applies to currencies that take over ETH computing power after ETH is converted to PoS) in 2022. A zero-rate discount will be implemented from September 8th to December 7th.

2. "Customers who hold more than 1 BTC in the mining pool balance or mining pool account, or more than 5 ETH will enjoy zero-rate BTC and ETH for one year. The same applies to ETH after ETH is transferred to PoS. The currency of computing power." This part of the content is intended to use a one-year zero-rate discount to hope that customers will keep their funds in the mining pool as much as possible, thereby reducing the pressure of runs.

3. "For the settlement function, the following adjustments will be made: the BTC rate model will be changed from FPPS to PPLNS (effective on September 8), and the withdrawal of BTC and ETH that store the mining pool balance will be suspended (will be suspended in September A snapshot of the balance of each sub-account will be taken on the 6th), and the flash exchange function will be suspended (effective on September 6th). In addition, because the mining pool account funds are hosted in the Biyin Wallet, the specific withdrawal plan will be implemented with reference to the official announcement of the Biyin Wallet." This The announcement was released on September 6, and the suspension time was also on September 6. It did not provide users with a choice at all, which shows that the running pressure has reached an unbearable level.

Why did the leading mining pool suddenly encounter a run?

Biyin was founded in 2017 by the original core team of BTC.com. According to miningpoolstats data, Biyin’s computing power currently ranks fourth in the world, making it one of the largest mining pools in the world. Why does such a large mining pool leader suddenly suspend miners’ withdrawals? And why did the miners suddenly withdraw a large amount of cash?

In fact, there have been rumors since July 2022 that Biyin misappropriated miners’ currencies, and as a result, it was liquidated by DeFi. In May 2022, UST was unanchored, and Luna collapsed subsequently, which triggered the liquidation crisis of Sanjian Capital, directly leading to the collapse of the price of Ethereum during the liquidation process. Judging from the results, Binyin may also have been liquidated. It’s just that the accumulated funds at that time were still able to meet the miners’ payment, and this hole has been covered until today.

The sudden run on a large number of miners is likely related to the upcoming Ethereum merger. Many miners feel that they may not be able to mine after Ethereum is converted to PoS, so they choose to sell their machines and withdraw their coins, which increases the pressure on currency redemption in the short term. Moreover, the current payment pressure on miners is likely to have exceeded the critical value of currency printing. At the same time, some miners who were bearish on Ethereum 2.0 chose to leave and switch to USDT for safety; of course, there were also some insiders who fled early after knowing the truth. This is constantly creating pressure on the currency redemption, and all of this directly caused the beginning of the article. The "restricted exchange" announcement issued by Biyin. However, after all, Biyin is a mining pool giant and has always had a good reputation. So are there other reasons for Biyin's current situation besides these emergencies?

It took a day to freeze three feet, and the crazy expansion was choked by policies

As the old saying goes, "It took a day to freeze three feet." In fact, the crisis of currency printing is by no means a collapse. The incident has caused it, and its inherent crisis may have begun in 2021. In order to better understand the current dilemma of currency printing, we might as well take a look at the development history of currency printing.

On April 21, 2021, Pan Zhibiao, the founder of Biyin, said in an interview: "The layoffs at the end of 2018 are something that still makes me very sad. At that time, although the entire team was only more than thirty Individuals, but in the big bear market, in order to save cash flow and invest in product research and development, they had to lay off employees, and in the end only about 20 people were left. However, after this layoff, Biyin worked hard and became the leading mining pool. This time After the layoffs, Biyin has almost no more layoffs. Biyin has been maintaining slow expansion. From the second half of 2020 to the first quarter of 2021, it gradually entered a period of rapid expansion. From a layout perspective, it is still the same as in previous years. Move the machines from Xinjiang to Sichuan and other hydroelectric power generation areas. Set up one or two mines in the second half of the flood season to expand the scale and make the company and customers' machines safer."

As Pan Zhibiao said, in From the second half of 2020 to the first quarter of 2021, Biyin began to enter a period of rapid expansion. First of all, Biyin is expanding its mines in China to welcome the flood season; secondly, the Poolin mining pool has also begun to play mining pool finance; secondly, it has begun to vigorously expand overseas markets.

On February 8, 2021, Biyin Mining Pool acquired Novablock Mining Pool, and its business expanded to growing regions such as North America. All Novablock’s computing power automatically switched to Biyin Mining Pool. On January 12, 2021, Biyin released Mars, a one-stop decentralized standard computing power protocol that combines standardized computing power products and liquidity mining. The protocol currently includes two tokens, namely the computing power token pBTC35A and the governance token MARS. If you invest pBTC35A into the Mars protocol, you will receive wBTC mining income and MARS. In addition, by providing liquidity for the pBTC35A/USDT and MARS/USDT trading pairs on Uniswap, wBTC and MARS are also available.

Just as Biyin was expanding rapidly and becoming popular, on May 21, the Financial Affairs Commission of the State Council requested to crack down on Bitcoin mining and trading activities and resolutely prevent individual risks from being transmitted to the social sector. Bitcoin The upstream and downstream sectors of the mining industry chain have suffered a huge blow. Biyin suffered huge losses after a large number of domestic mining pools were closed. Due to the previous crazy expansion, there was also huge cost pressure. Although the encryption market rebounded briefly later, the crisis of Biyin was temporarily suspended. However, the encryption market then continued to decline, coupled with the possibility of Luna thunderstorms. The DeFi liquidation caused by the coin printing crisis finally broke out at the peak of the run before the Ethereum merger.

As of September 6, Biyin’s computing power coin pBTC35A has dropped significantly, and the governance token Mars has been falling very early. This shows that smart money has already seen the Biyin crisis and began to flee early. The current market expectations are pessimistic, and the risk of runs is also rising.

Appeasement is useless, Pandora’s Box has been opened

On September 4, Pan Zhibiao, founder and CEO of Poolin Mining Pool, posted on social media in response to the recent "difficulties in withdrawing coins" issue. It said that the situation is caused by a lack of liquidity and the funds are safe. Currently, the net assets of Biyin Enterprises are positive. Possible solutions including liquid debt, debt for mining machines, and debt for shares will be proposed in the near future.

The official Telegram discussion group of BiYin also posted a message to appease the community at around 10:30 in the morning on September 4, saying: BiYin’s mining pool and wallet are operating normally, and users who are mining can also see the coins. All income will be paid as normal. Due to the recent wallet risk control management, the approval time is relatively long, but the wallet team is processing it one after another. Users are asked to wait patiently. We emphasize that user funds are safe and please do not create panic rumors.

Judging from the effect, the rumor seems to have gained legs and has already spread in the mining circle and the encryption market. The previous announcement still took a long time to review, but today it has been clearly stated that withdrawals will be suspended. The market's distrust of Biyin is spreading. Although Biyin can suspend user redemptions, it is difficult to prevent miners from escaping. Once a large amount of computing power escapes, Biyin's crisis will be greatly amplified. Currently, there is a high probability that Biyin is exchanging debt for mining machines and equity, as well as financing cooperation. It can be said that Biyin is currently racing against a run crisis. We will continue to pay attention to whether Biyin can survive the crisis.

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