Bitcoin prices slip below $30,000, by almost 14%, on China’s decision to stop power supply to mining companies on Sunday, which has hit the crypto market.
Bitcoin moved to a two-week low, while ether went below $2k on China’s crackdown on cryptocurrencies. Tether, a favourite currency in China, took a beating after the mining ban in the country.
Bitcoin Slides almost 14%
Beijing’s crackdown on cryptocurrency hits the crypto market as Chinese authorities decide to stop power supply to mining companies.
On June 21, bitcoin prices slid below $30,000 as mining companies did not receive a power supply. On Sunday, June 20, bitcoin prices were trading at $35,000 but dropped to around $30,000, a drop of almost 14% within a day.
In April, 2021, Bitcoin prices were at a record high of $65,000.
China’s Crackdown on Bitcoin
Chinese authorities have stopped activities in almost 26 mines in the province of Sichuan. A former bitcoin miner has confirmed this closure of mines in China. The disruption of power supply from Sichuan’s hydropower has affected the crypto mines.
The mining companies in China provide power to almost 80% of the global cryptocurrency trade. But the ban has affected 90% of bitcoin mining activities.
Sichuan, located in southwest China has many cryptocurrency mines. They require abundant hydropower energy for their operations. The ban on the supply of electricity to these areas has affected mining activities in the crypto sector. All mining centres have to stay closed as they do not get the power supply to run the mines. The Sichuan Energy Bureau says, “Screen and clean up” to miners on Sunday.
According to the Bitcoin Electricity Consumption Index from the Cambridge University, Sichuan is the second-largest mining centre in China after Xinjian. Other regions in Inner Mongolia and Qinghai have shut down mining activities as ordered by authorities. The ban on bitcoin in Inner Mongolia took place in May. China stops mining activities in Xinjiang with a tough stance in June.
The electricity ban by China on the crypto mines is trending news on social media. The order to stop electricity supply to the mines took place on Sunday.
Beijing’s Action Against Crypto from 2013
The risk of speculation has forced Beijing to halt the crypto mines. Environmental concerns are increasing, especially as crypto mining operations require a large quantity of electricity. China takes stringent actions to stop all financial risks associated with speculation in the crypto market.
Wiebo, the largest social media platform in China, has taken strict action on all crypto-related accounts. After the central banks ban on the power supply to the mining centres, this move from Weibo has affected the cryptocurrency industry.
China brought a ban on many crypto-related accounts on June 6, 2021. Binance, OKEx, and Huobi are some crypto exchange accounts that came under the ban.
In 2017, China had imposed a ban on ICO or initial coin offerings. Bitcoin prices came down by almost 6% on the Chinese ban in September 2017. All initial coin offerings were declared illegal in China, which caused a fall in bitcoin prices. The central bank fears that the digital currency may cause risk to China’s financial stability and capital control.
In 2013, the People’s Bank of China enforced strict action on financial institutions handling bitcoin transactions. The central government asks banks to avoid handling transactions in bitcoin currencies.
China is very clear that it does not consider Bitcoin as a legal tender. It should not be used as a currency to pay for goods and services. Bitcoin has a rapid rise in usage and value. Strict action against digital currency helps to prevent the laundering of cash, say authorities.
Investors should understand the risks involved in bitcoin trading. In China, more people are heavily interested in digital currency. It will help them avoid control on trading in the Chinese yuan.
China intends to launch its official cryptocurrency. The crackdown on crypto mining is to prevent investment into other cryptocurrencies, say analysts. The nationwide crackdown on cryptocurrency mining affects cryptocurrency investors who are in the crypto market. China’s central government has taken a tough stance against miners.
Many Chinese miners are moving to other countries for a more conducive atmosphere. Countries like Afghanistan and Kazakhstan are the most preferred areas by these miners. North America is another spot that attracts miners.
Institutional investors with investments in cryptocurrencies are giving up their holding on digital currencies. They have lost heavily by the tumbling cryptocurrency prices.
Altcoins on a Single-Day Slide of 6%
Apart from bitcoin, other major cryptocurrencies like Ethereum, Dogecoin, and Cardano have been under severe pressure.
Altcoins like Dogecoin, Litecoin, and ether have dropped almost 5% to 6%, on the Chinese crackdown on the crypto market.
Ether went below $2,000 as prices dipped on the second-largest cryptocurrency by market capitalization. Ether slipped from $2,240 on Sunday, June 20, to $1,890 on Monday, June 21, 2021.
Litecoin slipped from $155 to $131 on 20 and 21 June 2021.
Dogecoin moved from $0.2865 to $0.1795 within two days of the Chinese ban.