Bitcoin dips after China intensifies crypto crackdown

22 Jun 2021

Image: © fox17/Stock.adobe.com

The Chinese government has shut down bitcoin mining farms and ordered financial services firms to cease crypto activities.

Bitcoin dipped in value to a two-week low after another bout with regulators in China.

Chinese lawmakers have ramped up their actions in curtailing bitcoin mining and the provision of cryptocurrency-related services.

On Monday (21 June), the People’s Bank of China ordered financial institutions, including banks and Alipay, to cut off cryptocurrency transactions.

This comes after a widespread crackdown on cryptocurrency mining farms in China over the last week sent the market into decline.

According to state media reports, authorities shut down vast mining operations in the Sichuan province, which accounted for almost 90pc of China’s crypto mining activity.

AFP reported that it is a “complete clean-up” on the part of authorities. It follows a similar crackdown in May.

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For years China has been a hotbed for massive crypto mining server farms that chug through power to verify transactions and create new coins.

But there has been a push against cryptocurrency in China, further evidenced by the government’s signal last month that it was time to “crack down on bitcoin mining and trading behaviour”.

As of this morning (22 June), bitcoin is valued at $32,100, down from $40,000 a month ago.

Any moves by China tend to have ripple effects across the crypto landscape. In particular, disruptions to mining could impact the supply of new bitcoin and processing power for transactions.

Another side effect of the mining crackdown has been the drop in prices for graphics processing units used by miners in the last few days.

The regulatory clampdown on financial services companies could ultimately make bitcoin and other cryptocurrency unusable for many in China if no service providers exist. This has all contributed to bitcoin’s drop in value.

China has been the fiercest when it comes to cracking down on cryptocurrency but the US is becoming increasingly sceptical of virtual currencies as well, with regulators flagging possible new tax rules while concerns are repeatedly raised over bitcoin mining’s environmental impact.

Jonathan Keane is a freelance business and technology journalist based in Dublin

editorial@siliconrepublic.com