Bitcoin fell to below US$33,000 on Monday for the first time since June 8 following the news of China’s continued crackdown on cryptocurrency mining. The country closed down bitcoin mines in one of its largest mining bases, Sichuan Province, on Sunday while other provinces are looking to follow suit.
“That means that more than 90 percent of Bitcoin mining capacity, or one-third of the global crypto network’s processing power, will be suspended in the short term,” BankLedger CEO Shentu Qingchun told the Global Times on Sunday.
Southwest China’s Sichuan Province is one of the country’s largest cryptocurrency mining bases that is mostly powered by hydroelectric sources. Other provinces like Xinjiang Uygur Autonomous Region, Inner Mongolia Autonomous Region, and Yunnan Province have all declared new rules as well, restricting cryptocurrency mining.
Last May, Beijing started its clampdown on bitcoin mining due to individual financial risks while other mining regions also called for restricting the activity due to its use of electricity generated from high polluting sources like coal. With cryptocurrency mines being closed in Sichuan Province, Beijing’s crackdown on bitcoin mining suggests a wider reason.
“We had hoped that Sichuan would be an exception during the clampdown as there is an electricity glut there in the rainy season. But Chinese regulators are now taking a uniform approach, which would overhaul and rein in the booming Bitcoin mining industry in China,” Shentu added.
The closing of the cryptocurrency mines has affected the global bitcoin hash rate. Around 20% – 40% decline in real-time hash rates has transpired in bitcoin mining pools backed by Chinese mining bases like Huobi Pool, Binance, and AntPool.
Reports estimate that 65% of global bitcoin mining is done in China.
Information for this briefing was found via Global Times and Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.