Crypto massacre: Savage move from China cripples bitcoin and doge

Almost all cryptocurrencies have been absolutely brutalised and investors are in a world of pain after a savage move from China.

China is not messing around when it comes to clamping down on cryptocurrencies and investors around the world are starting to feel the pinch.

Bitcoin and other major currencies crashed hard this weekend and the market is still taking a hammering this morning.

As of around 6.30am this morning, Bitcoin is down 9.39 per cent, Ethereum is down 13.44 per cent and XRP is down 11.47 per cent.

However one of the biggest losers is the meme currency Dogecoin, which is down a whopping 28.45 per cent in the last 24 hours.

It’s all because of China’s massive crackdown on the emerging currencies which has entered a harsh new phase in the past week.

Channel $BTCpic.twitter.com/jxRZ9OHfBV

— MartyParty (@martypartymusic) June 21, 2021

Business experts at Shelly Palmer said the crackdown was announced weeks ago, but now it has come into effect with a bunch of “gigantic Chinese bitcoin mining operations” being shut down.

“This sudden drop in worldwide mining capability slowed transaction times from the algorithmically-set 10 minutes per block to more than 12 minutes per block, signaling to the market that the crackdown was real,” they said in a note.

“This past weekend, even more Chinese miners went offline. This is no longer lip service or political theatre; China is full-on anti-crypto.”

Yesterday, the superpower moved in to shut down major mines — computer hubs where the coins are created — in a key southwestern province.

Chinese mines power nearly 80 per cent of the global trade in cryptocurrencies despite a domestic trading ban since 2017, but in recent months several provinces have ordered mines to close as Beijing turns a sharp eye to the industry.

Authorities in the province of Sichuan ordered the closure of 26 mines last week, according to a notice widely circulated on Chinese social media and confirmed by a former bitcoin miner.

Everything is going to be fine.

Seriously.

Be patient. Zoom out. Chill. Take a day off.

This is a movement.

— The Wolf Of All Streets (@scottmelker) June 22, 2021

Overnight, Beijing went hard again. According to the Global Times, China’s central bank held talks with a number of Chinese banks and payment institutions about cryptocurrency trading speculation, asking them to screen the capital accounts of cryptocurrency exchanges and over-the-counter dealers and cut relevant payment links.

In a statement, the People’s Bank of China (PBC) reiterated that no banks or banking institutions are allowed to provide products or services like registration, transactions or accounts for individuals who engage in cryptocurrency trading.

This has all been a nightmare for investors around the world.

The price of bitcoin sank to as low as $US32,309. The unit has taken a severe hit in recent weeks, having hit a record near $US65,000 in April, partly because of Beijing’s crackdown.

The notice reportedly instructed power companies to stop supplying electricity to all cryptocurrency mines by Sunday.

It vowed a “complete clean-up” and ordered local governments to carry out a “dragnet-style investigation” to find and shut down suspected crypto mines.

The province represents one of the largest bases for mining in the country. A former cryptocurrency miner told AFP they had “closed everything” in line with the requirements in recent days.

Bitcoin and other cryptos have been hit hard. Picture: AFP

“There have been working groups coming to check … making sure we shut down operations and removed the machines,” he said.

Sichuan, a mountainous region in southwest China, is home to a large number of cryptocurrency mines, which require a colossal amount of energy supplied by the province’s cheap and abundant hydropower.

According to a report in the state tabloid the Global Times, the closure of mines in the province has resulted in the shutting down of more than 90 per cent of the country’s bitcoin mining capacity.

On Monday, China’s central bank added that it recently summoned banks and payment institutions — including the Industrial and Commercial Bank of China, Agricultural Bank of China and AliPay (China) Internet Technology — over providing services for virtual currency transactions and speculation.

The People’s Bank of China said virtual currency transaction activities “disrupt the normal economic and financial order and breed risks of illegal cross-border asset transfers”, adding that institutions must cut off links facilitating them.

Beijing has turned the screw on cryptocurrency miners to stamp out financial risks from speculation, although environmental concerns about the gas-guzzling mines is also a factor.

Chinese media reported that electricity supply to all crypto mines across the province was stopped at midnight Sunday, as the topic trended on social media.

Crypto mines are being clamped down on. Picture: Lars Hagberg / AFP

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.

China is in the midst of a wide-ranging regulatory crackdown on its fintech sector, whose biggest players — including Alibaba and Tencent — have been hit with big fines after being found guilty of monopolistic practices.

– with AFP

Originally published as Crypto massacre: Savage move from China cripples bitcoin and doge