China’s efforts to restrain cryptocurrency trading and mining are potentially driving wild volatility in bitcoin and other markets.
Already down hard from records set this year, bitcoin and other digital currencies sold off last week after Chinese authorities renewed pressure on the country’s banks and payment companies to curb cryptocurrency-related transactions. Markets stumbled again after a powerful super regulator chaired by Vice Premier Liu He pledged to crack down on cryptocurrency mining and trading. The price of bitcoin fell below $32,000 early Monday, down from over $44,000 a week earlier.
China has been a hotbed for cryptocurrency trading and mining – largely in response to currency manipulation. In 2017, concerns about capital flight led Beijing to impose bans on cryptocurrency exchanges and digital-currency fundraisings known as initial coin offerings. Beijing has also suggested it has environmental concerns about cryptocurrency mining with its massive energy consumption largely from coal-fired power plants while the Chinese government is making efforts to reduce its carbon emissions - a recent statistic illustrating the extent of the issue cited that the power consumption of Chinese Bitcoin miners would be equivalent to that of the entire nation of Italy by 2024.
The Chinese government is now looking at some of its broadest measures in efforts to crack down on cryptocurrency – the government is very uneasy about cryptocurrency markets and is even looking to implement strict policies around peer-to-peer cryptocurrency swaps, that on a practical level would be nearly impossible to enforce.
Source: Wall Street Journal