China’s Bad Touch on Cryptocurrencies Continues
DailyCoin
Published Jun 24, 2021 12:00PM ET
China’s Bad Touch on Cryptocurrencies Continues
- China’s ban on cryptocurrencies has extended to additional sectors, further crippling the market value of assets.
- Nvidia (NASDAQ:NVDA) and Asus have taken a hit as prices fell around China’s crypto mining restrictions.
- China’s third-largest bank, the Agricultural Bank of China (OTC:ACGBF), has joined in on the crackdown on Bitcoin as it begins to reject crypto-related transactions.
- In other developments, the hash rate of Bitcoin hit an 8 month low in the wake of mining restrictions.
China has been at the head of drastic cryptocurrency regulations around the world, and the current iteration is reaping havoc on the market. The Chinese government has always been against cryptocurrencies, issuing consistent threats to regulate them.
The government has previously cited the anonymous nature of cryptocurrencies for the restrictions, as they can be used for fraudulent activities and tax evasion. More recently, environmental concerns were added to the country’s growing list of marks against cryptocurrencies.
The reach of the ban stretches from financial institutions restricting crypto transactions, to social media giant Weibo (NASDAQ:WB) suspending popular crypto accounts capable of influencing the market and mining-related accounts.
Bitcoin’s Hash Rate Hits 8 Month Low
Following the crackdown on mining activities due to environmental and other concerns, miners in some cities have begun to close up shop. China has been the hub of cryptocurrency mining for years, but the recent restrictions around crypto in China has reduced the rate of mining by 46% from peak recorded levels in May.
With Sichuan miners packing up, the hash rate of bitcoin has plummeted to 91 EH/s, down from the 171.4 EH/s of six weeks ago. Mining profitability has also dropped to $0.226 per day, per terahash, per second. The drop in Bitcoin’s computational horsepower is a major factor for why Bitcoin is trading at $31,920 at the time of writing.
The Agricultural Bank of China Restricts Crypto Transactions
Cryptocurrency prices have been sent tumbling by another huge blow from China. The third-largest bank in China has revealed that its services will no longer include cryptocurrency-related transactions.
The statement declared “that once relevant behaviours are discovered, account transactions will be immediately suspended, customer relationships will be terminated, and relevant departments will be reported,” as reported by Colin Wu via Twitter. In the aftermath of the announcement, crypto prices dropped by about $1000.
On the Flipside
- There is a chance that China’s ban on Bitcoin mining will benefit Bitcoin in the long run.
- With the focus shifting to green mining, areas that are focused on renewable energy are becoming more attractive for mining.
- It is likely that a decentralization in hashrates will occur, meaning that the price of Bitcoin may no longer be subject to as many price fluctuations due to a single source, which at the moment is China.
- Texas and a number of North American cities are already gearing up to become the new home of Crypto mining, as the development of mines running on renewable energy scales up.
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Nvidia and Asus Feel the Heat
Key Tech firms, Nvidia and Asus are also being affected by the government’s decision to crackdown on bitcoin mining. The price of the graphic cards of Nvidia and Asus have dropped due to the reduced mining rate.
Orders for the graphic cards have dropped by up to two-third on e-commerce sites. The Nvidia Quadro P1000 was previously selling at 3000 Yuan, but now has a selling price of 2,429 Yuan at the time of writing. Graphic cards are an essential component in cryptocurrency mining, which requires a lot of processing power.
The initiative of Sichuan authorities ordering miners to cease operations is not only affecting the crypto business, but also the technological market.
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Written By: DailyCoin
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