Major cryptocurrencies – including Bitcoin, Ethereum, Dogecoin – are collapsing while China is expanding its penetration
The value of major cryptocurrencies – including Bitcoin, Ethereum, Cardano and Dogecoin – collapsed on Monday after Beijing made renewed efforts over the weekend to contain the sector and mine bitcoin mines in Sichuan province, one of the largest producers of digital currency of power to separate.
A mining farm, graphics cards and an Asiki mining farm.
Bitcoin fell around 9% early Monday morning after Chinese officials targeted bitcoin mines in key Sichuan province, part of a broader crackdown on the process by which computers consume vast amounts of electricity to solve complex problems.
China is the source of much of the world’s cryptocurrency trade – a 2020 study found it accounts for nearly 80% of global bitcoin operations – and Sichuan is its second most intensive mining region.
Local authorities claim the recent raid reduced the country’s bitcoin production by more than 90%, according to the state-run media Global Times.
The move appears to have sparked a sharp drop in Bitcoin’s hashrate, the computing power used to mine and process Bitcoin transactions.
The decline caused Bitcoin to drop to its lowest level in nearly two weeks, falling below $ 33,000 per token for the first time in 12 days.
Other major cryptocurrencies, which often mirror Bitcoin’s movements, also fell Monday morning, with Ether, Cardano and Dogecoin all losing between 5-6%.
The abundance of cheap electricity in China made it an ideal location for energy-intensive Bitcoin mining. With much of this energy coming from coal-fired power plants – an incredibly dirty source of energy – the industry is at odds with China’s new climate targets. It’s also a source of unease in the crypto community, particularly Tesla billionaire Elon Musk, who caused a market collapse when he announced the company would stop using the asset until it cleaned up its footprint. Aside from the environmental impacts that are fueling the current crackdown – which also shut down mines in Inner Mongolia and Xinjiang – China is also keen to prevent cryptocurrencies from “violating” the financial order, leading to a ban on financial services that facilitate crypto trading.
What to look out for
The cryptocurrency market still hasn’t recovered from this when China announced intensified regulatory action against cryptocurrencies in mid-May (an event that coincided with Musk’s environmental concerns). The total value of the market is now around $ 1.4 trillion, roughly 56% of what it was a little over a month ago.
Bitcoin breaks into China after the procedure (Reuters)
Musk denies “pumping and dumping” Bitcoin – and says Tesla will resume transactions once that mining target is met (Forbes)
China Takes Crypto Business, Says “Speculative” Trade “Seriously Violates” Financial Regulations (Forbes)