June 21, 2021: With the mining ban in a key southwestern province OF China, bitcoin dropped more than 10 percent on Monday after an escalation in the crackdown on the massive cryptocurrency mining industry.
Chinese mines account for about 80 percent of global trade in cryptocurrencies, despite a domestic trade ban since 2017, but in recent months several provinces have ordered mine closures as Beijing tightens its grip on the industry.
Authorities in Sichuan Province last week ordered the closure of 26 mines, according to notices widely circulated on Chinese social media and confirmed by a former bitcoin miner. The bitcoin fell as low as $ 32,309. The unit has been hit hard in recent weeks, after hitting a record a $65000 high in April, partly due to a crackdown in Beijing. The notice allegedly instructed power companies to cut off power to all cryptocurrency mines by Sunday.
He vowed a “complete clean-up” and ordered local governments to conduct “dragnet-style investigations” to find and close suspected corrupt mines. The province represents the largest mining base in the country. A former cryptocurrency miner told AFP he had shut down “everything” as required in recent days. “Working groups are coming to check … making sure we stop operations and remove the machines,” he said.
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 crypto mines in the sparsely populated but coal- and hydropower-rich regions of Inner Mongolia and Qinghai were also ordered to shut down in recent months, with citizens encouraged to report illegal mines.
Last month, the value of bitcoin dived after three Chinese financial industry bodies reasserted a ban on financial institutions from offering cryptocurrency services, warning against risky speculation by traders.
Beijing has turned to cryptocurrency miners to offset speculative financial risks, although environmental concerns about gas-laden mines are also a factor. Chinese media reported that power supply to all corrupt mines across the province was cut off in the middle of the night on Sunday, as the issue has been trending on social media. According to Cambridge University’s Bitcoin Power Consumption Index, Sichuan is China’s second-largest mining region in the northwest, after Xinjiang.
In the sparsely populated but coal and hydroelectric areas of Inner Mongolia and Qinghai, all crypto mines have been ordered to close in recent months, prompting citizens to report illegal landmines. Last month, three Chinese financial industry companies plunged the price of bitcoins after banning financial institutions from offering cryptocurrency services, warning against dangerous speculation by traders. China is facing a massive regulatory crackdown in its financial tech sector, with its biggest players – including Alibaba and Tencent – being fined heavily for monopolistic behavior.
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