Bitcoin price drops following comments on "full-scale" clampdown on cryptocurrency mining in China

Bitcoin price drops following comments on "full-scale" clampdown on cryptocurrency mining in China

The National Development and Reform Commission spokesperson Meng Wei  has announced that they will launch a "full-scale" clampdown on cryptocurrency mining in China, adding that there will be consequences if any institution is found to be abusing its access to subsidized power to participate in crypto mining.

The price of Bitcoin dropped following the remarks from Meng, who also noted that

they will raise electricity prices for anyone who abuses its access to subsidized power adding that the cryptocurrency trade produces "prominent risks".

Meng’s comments led to a 7% drop in the Bitcoin price, which is currently sitting at 60,541 at the time of writing.

The correlation between China’s actions on their crypto crackdown and the price of Bitcoin has led to concern by some that the market places too great a weight on China’s Bitcoin ban.

Beijing's crackdown has gone on for over eight years, starting in 2013 when the PBOC issued a notice prohibiting banks from handling transactions related to Bitcoin. The regulator did not prohibit individuals from trading, but warned them of the risks involved.

In 2019 Bitcoin mining began to gain attention, leading China’s National Development and Reform Commission (NDRC) to refer to it as an “undesirable industry”.  At the time more than half the world’s  crypto mining was based in China as a result of the cheap coal-based energy.

Since then, China has tightened its grip on cryptocurrency related activities, cracking down on money laundering and fraud, and implementing a number of bans throughout 2020 and 2021.

The latest ban has left virtually no loopholes for Chinese nationals to participate in the industry. The joint announcement released in September by regulators announced a complete ban of crypto, even penalizing Chinese nationals who work in marketing or tech support roles for foreign exchanges.

Meng Wei’s comments on the targeting of any remaining crypto miners come as part of China’s goals to reduce carbon emissions and achieve carbon neutrality, Meng added that China must "strictly prevent [cryptocurrency mining from] rising from the dead ashes”.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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