Bitcoin tumbles 8% after China steps up crackdown on crypto mining, shutting down 26 key sites in Sichuan

China bitcoin mining crackdown Chinese flag cryptocurrencies
China is increasingly cracking down on bitcoin.

Bitcoin dropped 8% on Monday after Chinese authorities ramped up their crackdown on cryptocurrency “mining” over the weekend, with bodies in the Sichuan province ordering 26 of the biggest miners to halt operations.

The world’s biggest cryptocurrency fell to $32,950 as of 6.20 a.m. ET. Bitcoin was down around 49% from April’s record high of close to $65,000, but was still roughly 12% higher for the year.

Other cryptocurrencies also dropped sharply, with ether down around 6% and binance coin roughly 4% lower, according to Coinmarketcap. A broader market sell-off also appeared to be weighing on crypto, as investors moved towards safer assets.

The latest move by Chinese authorities to restrict bitcoin mining came in the southwestern Sichuan province over the weekend, when bitcoin miners were told to “clean up and terminate” their operations. Sichuan authorities said 26 bitcoin mining companies must be closed down on Sunday, according to a notice seen by the South China Morning Post.

Chinese state media outlet Global Times then reported that more than 90% of China’s bitcoin mining capacity was estimated to be closed down, at least for the short term, on Sunday.

Bitcoin mining – whereby computers solve complex puzzles to secure the network and mint new coins – has become a target in increasingly climate-conscious China because of the huge amounts of energy it uses.

Sichuan’s clampdown followed similar moves by authorities in Xinjiang, Yunnan and Qinghai.

“The dominant driver of bitcoin right now is the crackdown on mining & trading in China that began in May,” Michael Saylor, a leading bitcoin bull and chief executive of tech firm MicroStrategy, wrote on Twitter.

“This created a forced & rushed exodus of Chinese capital & mining from the bitcoin network,” Saylor said, describing this as “a tragedy for China and a benefit for the Rest of the World over the long term.”

Jeffrey Halley, senior market analyst at currency group Oanda, said the broader drop in risky assets following the Federal Reserve meeting was also weighing on bitcoin. Stocks have sold off after Fed officials on Wednesday moved forward their estimates of when the US central bank would have to raise interest rates.

“If, as I expect, the global buy-everything unwind continues this week, bitcoin will feel those chill winds as well,” Halley said.

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Inner Mongolia doubles down on crypto-mining ban and sets up a hotline for the general public to report suspected activity

bitcoin mining servers
  • China’s Inner Mongolia Autonomous Region has set up a hotline for the general public to report any outlying cryptocurrency-mining operations that are still active in the region.
  • Its a move to further crack down on mining operations that could jeopardize China’s goal to reduce carbon emissions.
  • Inner Mongolia was once a hub for crypto-mining operations but has tried to fully clear them out of the region.
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The government in China’s Inner Mongolia Autonomous Region is cracking down further on cryptocurrency-mining operations.

The Inner Mongolia Autonomous Region Development and Reform Commission announced on Tuesday that it has set up a hotline, email, and mail address for the general public to report any outlying crypto-mining operations that are still active in the region.

The commission is also targeting mining companies that are posing as data centers and enjoying preferential policies in tax, land, and electricity prices, and any company that offers land rental services for crypto mining operations.

The creation of a hotline comes after the commission announced in March it was trying to fully clear out and shut down all virtual currency mining projects by the end of April 2021, per The Block.

According to Cointelegraph, Inner Mongolia was once a hub for cryptocurrency mining operations, and accounted for 7.71% of the global Bitcoin hash rate from September 2019 to April 2020.

Now, China has pledged to reduce carbon emissions, and Chinese authorities have cracked down on mining operations. China pledged in 2020 to reach carbon neutrality before 2060 and reach peak carbon emissions before 2030.

The announcement from Inner Mongolia comes as the cryptocurrency market experiences a steep sell-off. As of Wednesday afternoon, the global crypto market cap is $1.6 trillion, a 18.46% decrease over the last day, according to CoinMarketCap.

Read more: ‘Wolf of All Streets’ crypto trader Scott Melker breaks down his strategy for making money using ‘HODLing’ and 100X trade opportunities – and shares 5 under-the-radar tokens he thinks could explode

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