Cryptocurrency Miners Halt China Business After Beijing Cracks Down, Bitcoin Price Dives

Bitcoin took a hammering after the latest Chinese move, and is now down nearly 50 percent from its all-time high.

By Reuters | Updated: 24 May 2021 10:42 IST

Cryptocurrency Miners Halt China Business After Beijing Cracks Down, Bitcoin Price Dives

In a statement to clients, HashCow said it will suspend buying new Bitcoin rigs

Highlights

Crypto miners use increasingly powerful, specially-designed computers
Bitcoin took a hammering after the latest Chinese move
China has lost its position as a global cryptocurrency trading centre

Cryptocurrency mining operators, including a Huobi Mall and BTC.TOP, are suspending their China operations after Beijing stepped up its efforts to crack down on Bitcoin mining and trading, sending the digital currency tumbling.

A State Council committee led by Vice Premier Liu He announced the crackdown late on Friday - the first time the council has targeted virtual currency mining, a big business in China that accounts for as much as 70 percent of the world's crypto supply.

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 (price in India).

Cryptocurrency Transactions Banned by China in Financial Institutions

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

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

US Federal Reserve Chairman Jerome Powell turned up the heat on cryptocurrencies last week. On Thursday, Powell said they pose risks to financial stability, and indicating that greater regulation of the increasingly popular electronic currency may be warranted.

Huobi Mall, part of cryptocurrency exchange Huobi, said in a statement late on Sunday that all of its custody businesses have been suspended.

"Meanwhile, we're contacting overseas service providers, to pave way for exports of mining rigs in the future," Huobi Mall said via its official Telegram community, and asked clients "not to worry and calm down."

BTC.TOP, a crypto mining pool, also announced the suspension of its China business citing regulatory risks.

Founder Jiang Zhuoer said in a micro blog post via Weibo that in the future, BTC.TOP will mainly conduct crypto mining business in North America.

"In the long term, nearly all of Chinese crypto mining rigs will be sold overseas, as Chinese regulators crack down on mining at home," he wrote.

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," Jiang said, predicting the rise of US and European mining pools.

HashCow, another crypto miner which owns 10 mining sites in Chinese provinces including Xinjiang and Sichuan, and sells computing power to investors, said it will fully comply with government regulations.

In a statement to clients, HashCow said it will suspend buying new Bitcoin rigs, and promised full refund to those investors who had placed orders for computing powers but had not yet started mining.

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