Crypto miners halt China business after Beijing cracks down, bitcoin tumbles

Published May 24, 2021
Representations of the virtual currency Bitcoin stand on a motherboard in this picture illustration taken May 20. — Reuters
Representations of the virtual currency Bitcoin stand on a motherboard in this picture illustration taken May 20. — Reuters

Cryptocurrency miners, including HashCow and BTC.TOP, have halted their China operations after Beijing intensified a crackdown on bitcoin mining and trading, hammering digital currencies amid heightened global regulatory scrutiny of them.

A State Council committee led by Vice Premier Liu He announced the crackdown late on Friday as part of efforts to fend off financial risks. It was the first time the council has targeted virtual currency mining, a big business in China that accounts for as much as 70 per cent of the world's crypto supply.

Cryptocurrency exchange Huobi on Monday suspended both crypto-mining and trading services to mainland Chinese clients, adding it will instead focus on overseas businesses.

BTC.TOP, a crypto mining pool, also announced the suspension of its China business citing regulatory risks, while crypto miner HashCow said it would halt buying new bitcoin rigs.

Crypto miners use increasingly powerful, specially-designed computer equipment, or rigs, to verify virtual coin transactions in a process which produces newly minted crypto currencies such as bitcoin.

“Crypto mining consumes a lot of energy, which runs counter to China's carbon neutrality goals,” said Chen Jiahe, chief investment officer of Beijing-based family office Novem Arcae Technologies.

The crackdown is also part of China's stepped-up drive to curb speculative crypto trading, he added.

Bitcoin took a beating after the latest Chinese move, and is now down nearly 50pc from it's all-time high. It shed as much as 17pc on Sunday, before paring some losses and was last trading steady in Asia.

Elsewhere, Ether fell to a two-month low on Sunday, down 60pc from a record peak hit just 12 days ago,

Investor protection and money laundering are particular concerns of global financial regulators who are grappling with whether and how they should regulate the cryptocurrency industry.

The latest shakeout in digital currencies also stems from tighter scrutiny in the United States. Last Thursday, US Federal Reserve Chairman Jerome Powell said they pose risks to financial stability, and indicating that greater regulation of the increasingly popular electronic currency may be warranted.

Huobi made the announcement via its official Telegram community for Huobi Mall, as well in a statement to Reuters. BTC.TOP and HashCow could not be immediately reached for comment

Dirty business

The annual energy consumption of China's cryptocurrency miners is expected to peak in 2024 at about 297 terawatt-hours, greater than all the power consumption by Italy in 2016, according to a study recently published in Nature Communications.

Chinese President Xi Jinping has pledged carbon neutrality by 2060.

China has already lost its position as a global cryptocurrency trading centre after Beijing banned crypto exchanges in 2017.

“Eventually, China will lose crypto computing power to foreign markets as well,” BTC.TOP founder Jiang wrote in a micro blog post via Weibo, predicting the rise of US and European mining pools.

Chen of Novem Arcae said the crypto craze, if not curbed, could turn into froth similar to the Dutch tulipmania in the 17th century — often regarded as the first financial bubble in recorded history.

“The only difference is that after the tulip bubble burst, there were still some beautiful flowers left,” Chen said.

“But when the virtual currency bubble bursts, what would be left are merely some computer codes.”

Opinion

Pakhtuns, state and nationalism
Updated 15 Oct 2021

Pakhtuns, state and nationalism

They have lost the most in the ‘war on terror’. Why then is the PM painting Pakhtuns as a nation of holy warriors?
Unity of faith
15 Oct 2021

Unity of faith

There is unity in the apparent diversity of faith traditions.
The people’s page
Updated 15 Oct 2021

The people’s page

Many are disillusioned with the ‘Naya Pakistan’ narrative.
The next 22 months
Updated 14 Oct 2021

The next 22 months

There are at least 11 key challenges which the government will face in the run-up to the next polls.

Editorial

No need for NAB
Updated 15 Oct 2021

No need for NAB

THE National Accountability Bureau has sent instructions to its regional bureaus to stop processing cases that fall...
Forced conversions
Updated 15 Oct 2021

Forced conversions

THE majoritarian view has once again prevailed in the matter of bringing about legislation against forced conversion...
15 Oct 2021

Transgender rights

MEMBERS of the transgender community in the country are often at the receiving end of both their families’ and...
One big mess
14 Oct 2021

One big mess

At its core, the tension is the result of blurring of institutional boundaries witnessed since the PTI government came to power.
Tareen’s admission
Updated 14 Oct 2021

Tareen’s admission

PRIME MINISTER Imran Khan’s estranged friend Jahangir Khan Tareen has finally confirmed what has long been alleged...
14 Oct 2021

Dengue outbreak

DENGUE cases continue to rise at an alarming rate in several cities of KP and Punjab. According to data provided by...