Malcolm Owen
Cryptocurrency miners in China have scaled back their operations after the government announced it would crack down on the practice, a decision that drove prices down over the weekend.
Late on Friday, the State Council's Financial Stability and Development Committee declared it would crack down on both Bitcoin mining and trading behavior. The claim was part of an effort to prevent and control financial risk across the entire financial industry, among other measures.
As a result, Reuters reports miners including HashCow and BTC.TOP have stopped or cut down their crypto-mining operations in the country. HashCow says it will stop buying new mining rigs, while BTC.TOP announced a suspension citing the regulatory risks.
On Monday, cryptocurrency exchange Huobi suspended mining and some trading services to new clients from mainland China, and instead will work on overseas business.
Following the news, Bitcoin's value dropped considerably, with it trading as low as $34,000 on Monday, and having lost some 17% of its value on Sunday alone. In April, Bitcoin hit a new all-time high price of $63,729, with its current value close to half that high.
Other cryptocurrencies are experiencing similar downturns. Ethereum dropped to a two-month low on Sunday, again 60% down from its peak less than two weeks prior.
The crackdown announcement follows after China banned financial institutions from conducting any business involving cryptocurrency on May 19, as well as warning against trading. On May 13, Tesla reversed its position on Bitcoin and stopped accepting it for new vehicle purchases, an event which saw Bitcoin's value drop 15%.
Apple has, so far, steered clear of dealing with cryptocurrencies directly, though analysts propose Apple's involvement could be a good thing for the industry.
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3 Comments
I wonder where those miners will go now? They won't get electricity as cheaply anywhere else. I remember reading that Chinese Bitcoin miners located near electricity generation plants - usually coal - that had spare capacity and, thus, sold their electricity ultra cheap.
Here’s hoping this is the beginnign of the end for cryptocurrency
I wonder if these entities slow down or stop purchasing rigs to mine the currencies if that will help the chip supply issues.