Cryptocurrency miners, including HashCow and BTC.TOP, halted all or part of their operations in China after Beijing stepped up its crackdown on bitcoin mining and trading, hammering digital currencies amid a backdrop of increased global regulatory oversight.
A State Council committee headed by Vice Premier Liu He announced the crackdown on Friday evening as part of efforts to ward off financial risks. This was the first time the Chinese firm has targeted virtual currency mining, an important activity in the world’s second largest economy which, by some estimates, accounts for up to 70% of the global cryptocurrency supply. . Read more
Cryptocurrency exchange Huobi suspended crypto mining and some trading services to new clients from mainland China on Monday, adding that it will focus on foreign companies instead.
BTC.TOP, a crypto-mining pool, also announced the suspension of its activities in China citing regulatory risks, while crypto miner HashCow said it will stop buying new mining platforms of Bitcoin.
Crypto miners are using increasingly powerful and specially designed computer equipment to verify virtual coin transactions in a process that produces newly minted cryptocurrencies such as bitcoin.
“Crypto mining uses a lot of energy, which defeats China’s carbon neutrality goals,” said Chen Jiahe, investment director at Beijing-based family office Novem Arcae Technologies.
The crackdown is also part of China’s heightened willingness to curb speculative crypto trading, he added.
Bitcoin was beaten after the latest Chinese move and is now down almost 50% from its all-time high. It lost as much as 17% on Sunday, before cutting some losses and was last stable in Asia. Elsewhere, Ether fell to its two-month low on Sunday, down 60% from a record high just 12 days ago,
Investor protection and money laundering are particular concerns of global financial regulators who wonder if and how they should regulate the cryptocurrency industry.
The latest disruption in digital currencies also stems from closer scrutiny in the United States. Last Thursday, U.S. Federal Reserve Chairman Jerome Powell said they pose risks to financial stability, and said tighter regulation of increasingly popular electronic money may be warranted. Read more
“Huobi always strives to comply with the ever-changing policies and regulations of each jurisdiction,” Huobi said in a statement to Reuters.
BTC.TOP founder Jiang Zhuoer said in a micro blog post via Weibo that his mining business would no longer be open to mainland China, while HashCow said it would suspend new businesses in China in a notice. to customers. BTC.TOP and HashCow could not be reached immediately for comment
According to a study recently published in the scientific journal Nature Communications, the annual energy consumption of Chinese cryptocurrency miners is expected to peak in 2024 at around 297 terawatt hours, which is more than all of Italy’s energy consumption in 2016.
Chinese President Xi Jinping has pledged carbon neutrality by 2060.
China has already lost its position as a global cryptocurrency trading hub after Beijing banned cryptocurrency trading in 2017.
“Eventually, China will also lose its crypto computing power to foreign markets,” wrote Jiang, founder of BTC.TOP, predicting the rise of US and European mining pools.
Chen of Novem Arcae said the crypto craze, if unchecked, could turn into a moss similar to Dutch tulipmania in the 17th century – often considered the first financial bubble in recorded history.
“The only difference is that after the tulip bubble burst, there were still beautiful flowers left,” Chen said.
“But when the virtual currency bubble bursts, there would only be a few computer codes left. “
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