Bitcoin plunged on Monday after a nationwide crackdown on cryptocurrency mining in China. The world's most popular cryptocurrency fell 5.79 per cent to $33,218 on Monday afternoon, according to CoinMarketCap. Bitcoin's dip was triggered by a crackdown by local authorities at the southwest province of China's Sichuan that ordered a halt on Bitcoin mining amid energy usage concerns. Over 90 per cent of China's Bitcoin capacity is expected to shut down. This is but the latest sign of how global authorities are toughening their stance on crypto.
The cryptocurrency had touched $65,000 during its peak in April. But China's Bitcoin mining operations have been on a retreat since May when the government confirmed a ban on its transactions. China was one of the world's most vibrant markets for digital currency trading and mining, as mentioned in a report in the Financial Times. The crackdown is driven by environmental concerns brought about by the industry.
Sichuan has ordered 26 of the largest local mines to stop operating as investigation is conducted, following meetings by the Development and Reform Commission's Energy bureau. The probe will last till June 25. Many miners believe this is the end of their time in the country. Governments in Xinjiang, Yunnan and Qinghai -- all leading mining locations -- also announced plans to shut down mining operations.
The Basel Committee on Banking Supervision had also warned that the growing use of crypto assets has 'the potential to raise financial stability concerns'. Global regulators called for the toughest bank capital rules to be imposed on cryptocurrencies.
Chinese officials announced further measures targeting Bitcoin creators in the country. The northern region of Inner Mongolia also banned mining and introduced a telephone hotline for reporting of suspected operations.
Beijing is putting immense pressure on local governments to reduce energy intensity as the country aims to reach peak output of greenhouse gas by 2030 and achieve carbon neutrality by 2060, the daily stated.
Long hours of running computers to produce Bitcoin is bad for the environment, analysts have long pointed out. According to Cambridge University's Bitcoin Electricity Consumption index, Bitcoin mining consumes 133.68 terawatt hours of electricity a year -- that is more than what Sweden consumed last year.
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