Bitcoin yesterday tumbled more than 10 percent after China broadened a crackdown on its massive cryptocurrency mining industry with a ban on mines in a key southwestern province.
Chinese mines power nearly 80 percent of the global trade in cryptocurrencies, despite a domestic trading ban since 2017, but in the past few months several provinces have ordered mines to close as Beijing turns a sharp eye to the industry.
Authorities in Sichuan Province last week ordered the closure of 26 mines, said a notice widely circulated on Chinese social media that was confirmed by a former bitcoin miner.
Photo: Reuters
The price of bitcoin sank to as low as US$32,309. The unit has taken a severe hit in the past few weeks, having hit a record near US$65,000 in April, partly because of Beijing’s crackdown.
The notice reportedly instructed power companies to stop supplying electricity to all cryptocurrency mines by Sunday.
It vowed a “complete clean-up” and ordered local governments to carry out a “dragnet-style investigation” to find and shut down suspected cryptomines.
The province represents one of the largest bases for mining in the country.
A former cryptocurrency miner told reporters that they had “closed everything” in line with the requirements in the past few days.
“There have been working groups coming to check ... making sure we shut down operations and removed the machines,” he said.
Sichuan, a mountainous region in southwest China, is home to a large number of cryptocurrency mines, which require a colossal amount of energy supplied by the province’s cheap and abundant hydropower.
The closure of mines in the province has resulted in the shutting down of more than 90 percent of the country’s bitcoin mining capacity, a report in the state-run Global Times tabloid said.
Beijing has turned the screw on cryptocurrency miners to stamp out financial risks from speculation, although environmental concerns about the mines is also a factor.
Chinese media reported that electricity supply to all cryptomines across the province was stopped at midnight on Sunday, as the topic trended on social media.
Sichuan is China’s second-most intensive mining region after Xinjiang in the country’s northwest, according to Cambridge University’s Bitcoin Electricity Consumption Index.
All cryptomines in the sparsely populated but coal and hydropower-rich regions of Inner Mongolia and Qinghai were also ordered to shut down in the past few months, with citizens encouraged to report illegal mines.
Last month, the value of bitcoin dove after three Chinese financial industry bodies reasserted a ban on financial institutions from offering cryptocurrency services, warning against risky speculation by traders.
China is in the midst of a wide-ranging regulatory crackdown on its fintech sector, whose biggest players — including Alibaba Group Holding Ltd (阿里巴巴) and Tencent Holdings Ltd (騰訊) — have been hit with big fines after being found guilty of monopolistic practices.
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