In the context of Bitcoin still facing significant challenges after a drop of up to 43% from its all-time high (64000 USD), a series of bad news may continue to push Bitcoin and the cryptocurrency market further into instability.
According to CoinTelegraph, some large Bitcoin mining companies decided to cease operations in China over the past weekend. This shutdown decision was made after reports emerged that the Chinese government was planning to tighten cryptocurrency mining activities.
Specifically, Vice Premier Liu He and the State Council of China announced over the weekend that they would introduce a series of regulatory measures governing cryptocurrency mining and trading, amidst the backdrop of cryptocurrency mining being a major industry in China, accounting for up to 70% of the global cryptocurrency supply.
Accordingly, on the morning of May 24, three Bitcoin mining companies announced plans to temporarily halt their operations in China. Among them, BTC.TOP, which accounts for up to 2.5% of the global Bitcoin hash rate (hash rate – the measure of the speed of Bitcoin mining machines), stated they would cease operations in mainland China and move to the U.S.
Huobi Mall – a subsidiary of the cryptocurrency exchange Huobi – also announced it would no longer sell cryptocurrency mining equipment in China, while affirming it would suspend its mining operations there. Meanwhile, the mining company HashCow stated they would stop purchasing new Bitcoin mining equipment for the time being.
Three of China’s major trade associations issued joint warnings against cryptocurrency investments last week. A hotline has been set up in Inner Mongolia to encourage citizens to report any cryptocurrency mining activities they detect.
The Bitcoin hash rate – a measure of the computational power used to ‘mine’ the cryptocurrency – has dropped by 30% globally since the recent warnings from China began. Accordingly, the total hash rate of all Bitcoin mining machines worldwide has plummeted from 171 Eh/s to just over 118 Eh/s as of May 22.
This could be seen as a sign that miners have abandoned Bitcoin as news of China’s tightening cryptocurrency regulations surfaced, or that miners have shifted to mining other coins amidst Bitcoin’s price drop.
According to Cointelegraph, announcements regarding strict management of cryptocurrency mining or trading by China are not new. Nevertheless, these announcements still negatively impact the electronic market. Along with the ‘dampening’ tweets from Elon Musk, the recent announcements from China are believed to be a reason for the steep decline in the cryptocurrency market. The total market capitalization at present has decreased by up to 1 trillion USD compared to this time just 12 days ago.
Source: Cointelegraph