When Elon Musk isn’t busy manipulating the cryptocurrency market, China is happy to do so in his place. In a repeat of what we witnessed earlier this year, bitcoin is crashing on Monday, following more bad news from China, where many mining operations have been taken offline.
China’s desire to regulate digital currency isn’t new, and the country has sent similar shockwaves through the market in previous years. The effects on the price of bitcoin have been drastic, but the currency has always bounced back, rallying to new highs. It’s too early to tell if the same will be true following China’s latest moves, as the entire market continues to stay in the red.
Chinese authorities announced new bans on cryptocurrencies a few weeks ago, driving the market into panic mode. At the time, three regulatory bodies in the region announced a crackdown on digital coins. They announced a ban on financial institutions and payment companies from providing assistance to buyers for crypto transactions. Bitcoin lost nearly $14,000 in value as the news came out. That was just days after Elon Musk abruptly changed his stance on bitcoin, invoking environmental concerns.
China’s new action against Bitcoin targets mining, which is the electricity-consuming operation of creating new bitcoin units by solving incredibly complex mathematical problems that validate transactions on the network. The bitcoin farms run continuously, with a notable percentage of the world’s bitcoin mining operations being located in China.
The Sichuan Province ordered local bitcoin miners on Friday to stop doing business by Sunday, Chinese state media Global Times reported (via Gizmodo). The Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau ordered all electricity companies to “screen, clean up and terminate” mining operations by Sunday, including 26 firms that were already identified.
Bitcoin isn’t the only cryptocurrency being mined with sophisticated computers. Other coins are also “produced” this way, including ethereum, the world’s second-largest digital coin.
Some local miners believed that the region’s abundant hydroelectric energy would save them, but there was no reprieve from authorities. The report notes that the ban took down 90% of China’s total bitcoin mining capacity.
Some mining farms already starting shutdown their facilities. pic.twitter.com/07WpvosOqc
— Molly (@bigmagicdao) June 19, 2021
Videos popped on social media showing the massive computers going offline, as ordered. Some of the miners are looking to relocate to other parts of the world. Others will sell their equipment to international buyers looking to expand their own mining operations. A Chinese logistics company was already shipping 6,600 pounds (3,000 kg) of crypto mining equipment to an unnamed buyer in Maryland for around $9.37 per kilogram. That’s quite a Prime Day deal.
#China logistics firm in Guangzhou confirms to @CNBC it’s airlifting 3,000kg (6,600lbs) #bitcoin mining machines to Maryland, USA. Fenghua International advertises products delivered to door, tax on both ends cleared. Price per kilo: as low as $9.37! #cryptocurrencies pic.twitter.com/8yUjZjhpkk
— Eunice Yoon (@onlyyoontv) June 21, 2021
At the time of writing, Bitcoin was trading at around $32,150 after hitting a low of $31,581 earlier on Monday. That’s an almost $10,000 drop in value in seven days, from last week’s $41,240 high. Bitcoin dropped nearly 13% since Sunday’s high of $36,135. Many other digital coins saw double-digit dips on Monday, following Bitcoin’s price closely.
Less experienced crypto enthusiasts might be worried about what’s coming next, but for more seasoned players, Monday’s bloodbath was just another valley in what remains the most volatile and highly speculative trading opportunity available right now.