Bitcoin is still reeling after a massive 43% drop from its all-time high of $64,000, and a series of bad news could push the cryptocurrency market into even more turmoil.
According to CoinTelegraph, several major Bitcoin mining companies decided to halt their operations in China last weekend. This shutdown decision came amid reports that the Chinese government is planning to tighten regulations on cryptocurrency mining.
Specifically, Vice Premier Liu He and the State Council of China announced last weekend that they will introduce a series of measures to regulate cryptocurrency mining and trading. Cryptocurrency mining is a huge business in China, accounting for up to 70% of the world’s crypto supply.
On the morning of May 24, three Bitcoin mining companies announced plans to pause their activities in China. Among them, BTC.TOP, which controls about 2.5% of the global Bitcoin hashrate (a measure of mining power), said they will stop operations in mainland China and move to the US.
Huobi Mall, a subsidiary of the Huobi cryptocurrency exchange, also announced it will stop selling mining equipment in China and suspend its mining operations there. Meanwhile, HashCow said it will halt purchases of new Bitcoin mining equipment for now.
Three major Chinese trade associations issued joint warnings against cryptocurrency investments last week. A hotline was set up in Inner Mongolia to encourage people to report any crypto mining activities they spot.
Bitcoin’s global hashrate, which measures the computing power used to mine the cryptocurrency, has dropped 30% since China’s recent warnings. The total hashrate fell sharply from 171 exahashes per second (Eh/s) to just over 118 Eh/s as of May 22.
This could be a sign that miners are abandoning Bitcoin amid China’s crackdown or switching to mining other coins as Bitcoin’s price falls.
CoinTelegraph notes that China’s strict regulations on crypto mining and trading are not new, but these announcements continue to negatively impact the market. Along with Elon Musk’s critical tweets, China’s recent moves are seen as key reasons behind the crypto market’s plunge. The total market cap has dropped by $1 trillion compared to just 12 days ago.
Source: CoinTelegraph
