Cryptocurrency: Many Bitcoin mines in China closed

Cryptocurrency

Everyone is talking about cryptocurrencies. The most prominent representative, Bitcoin, has gained enormous popularity all over the world, not least thanks to Tesla boss and multi-billionaire Elon Musik. The trend does not stop at China either, on the contrary: Not only are various types of crypto currencies digitally produced there, the country with around 1.4 billion inhabitants is also one of the most important producers of crypto currencies. The Chinese government doesn't like that at all - and recently closed numerous Bitcoin mines in the country, which was also noticeable negatively in the global Bitcoin exchange rate.

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China closes numerous Bitcoin farms

The global Bitcoin rate fell by around nine percentage points yesterday, Monday, after the Chinese government in the south-west of the country closed more than 20 so-called Bitcoin farms. Basically, these are nothing more than large halls full of computers, with the help of which a large number of complex arithmetic tasks can be carried out with enormous use of electricity, which are rewarded with bitcoins - the concept is called "proof of work", i.e. proof of work done. Other crypto currencies rely on different principles, Chia, for example, demands "proof of space", i.e. freely available storage space. This has recently led to rising prices for hard drives and SSDs, also in China.

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State fears loss of control

The shutdowns of Bitcoin farms in China are due to the Chinese government's concern about financial stability in the country, but also to the fact that transactions with cryptocurrencies are carried out independently of central banks. The government therefore fears that the state will lose control. At the same time, the People's Republic is working on its own, state-owned cryptocurrency that is linked to the central bank. The gigantic power consumption of Bitcoin mining may also play a role in the crackdown in China. The country has set itself ambitious CO2 targets - achieving them could be difficult with countless power-hungry crypto mines in the country.

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No electricity for bitcoin farms

The Chinese government not only closed bitcoin farms and monitors compliance with the closings, electricity suppliers have also been instructed to stop supplying the corresponding farms. At the same time, the Chinese central bank recently invited cryptocurrencies for central banks and payment service providers, including, for example, Alipay - the online payment system is widespread in China and is used daily by a large part of the Chinese population.

Source: Spiegel

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China tells banks to stop supporting cryptocurrency

image copyrightReuters

China has expanded its clampdown on cryptocurrencies, telling banks and payments platforms to stop supporting digital currency transactions.

That follows an order on Friday to shut down Bitcoin mining operations in Sichuan province.

The price of Bitcoin slumped by more 10% on Monday, and fell again on Tuesday, dropping below $30,000.

The value of the cryptocurrency has fallen by about 50% since hitting a record high above $63,000 in April.

On Monday, China's central bank, the People's Bank of China (PBOC), said it had recently summoned several major banks and payments companies to call on them to take tougher action over the trading of cryptocurrencies.

Banks were told to not provide products or services such as trading, clearing and settlement for cryptocurrency transactions, the PBOC said in a statement.

China's third-largest lender by assets, the Agricultural Bank of China, said it was following the PBOC's guidance and would conduct due diligence on clients to root out illegal activities involving cryptocurrency mining and transactions.

China's Postal Savings Bank also said it would not facilitate any cryptocurrency transactions.

Chinese mobile and online payments platform Alipay, which is owned by financial technology giant Ant Group, said it would set up a monitoring system to detect illegal cryptocurrency transactions.

The latest measure came after authorities in the southwest province of Sichuan on Friday ordered Bitcoin mining operations to close down.

China accounted for around 65% of global Bitcoin production last year, with Sichuan rating as its second largest producer, according to research by the University of Cambridge.

Last month China's cabinet, the State Council, said it would crack down on cryptocurrency mining and trading as part of a campaign to control financial risks.

Some analysts have warned of potential further falls in the price of Bitcoin due to a price chart phenomenon known as a 'death cross', which occurs when a short-term average trendline crosses below a long-term average trendline.

Other cryptocurrencies also fell as investors worried about tougher regulation of digital currencies around the world.

media captionBitcoin explained: How do crypto-currencies work?

Separately, the auction house Sotheby's said that a rare pear-shaped diamond that is expected to sell for as much as $15m can be bought at an auction next month using cryptocurrencies.

It is the first time that such a large diamond has been offered in a public sale with cryptocurrency.