Cryptocurrency mining operators, like 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.
According to an announcement by the government’s cabinet after regulators reiterated their ban of digital tokens in financial transactions, delivering a one-two punch that may further weigh on the cryptocurrency industry after triggering last week’s global sell-off.
The government will “crackdown on bitcoin mining and trading behaviour, and resolutely prevent the transfer of individual risks to the society”, according to a statement by the State Council’s Financial Stability and Development Committee chaired by Vice-Premier Liu He, the Chinese president’s top representative on economic and financial matters.
Crypto miners use increasingly powerful, specially-designed computer equipment, or rigs, to verify virtual coin transactions in a process that produces newly minted cryptocurrencies.
“Crypto mining consumes a lot of energy, which runs counter to China’s carbon neutrality goals,” said Chen Jiahe, chief investment officer of Beijing-based family office Novem Arcae Technologies.
The crackdown is also part of China’s stepped-up drive to curb speculative crypto trading, he added.
U.S. Federal Reserve Chairman Jerome Powell increase the intensity of cryptocurrencies last week. On May 20, Powell said they pose risks to financial stability, and indicating that greater regulation of the increasingly popular electronic currency may be warranted.