China’s crackdown forces cryptocurrency mining operators to terminate operations business and economic news
After Beijing stepped up its efforts to crack down on Bitcoin mining and trading, which led to a plunge in digital currencies, cryptocurrency mining operators such as Huobi Mall and BTC.TOP are suspending their Chinese operations.
The State Council Committee, led by Vice Premier Liu He, announced the effort late on Friday – this is the first time the council has targeted virtual currency mining, a large Chinese company that accounts for 70% of the global cryptocurrency supply. .
Crypto miners use increasingly powerful, specially designed computer equipment or drilling rigs to verify virtual coin transactions in the process of generating newly minted cryptocurrencies (such as Bitcoin).
After China’s latest move, Bitcoin has been hit hard and has now fallen by nearly 50% from a historical high. Before making up part of the loss, it fell by 17% on Sunday and has recently stabilized in Asia.
Investor protection and prevention of money laundering are issues of particular concern to the government and financial regulators, who are working hard to decide whether and how to regulate the cryptocurrency industry.
Fed Chairman Jerome Powell (Jerome Powell) increased its focus on cryptocurrencies last week, saying on Thursday that they pose a risk to financial stability and that greater supervision may be needed.
Huobi Mall, a part of Huobi Mall, said in a statement on Sunday evening that all its custodial services have been suspended.
“At the same time, we are contacting overseas service providers to pave the way for future export of mining machines.” Huobi Mall stated in its official Telegram community, and asked customers to “don’t worry and calm down.”
The cryptocurrency mining pool BTC.TOP also announced the suspension of its business in China on the grounds of regulatory risks.
The founder Jiang Zhuoer stated in a Weibo on Weibo that in the future, BTC.TOP will mainly carry out cryptocurrency mining business in North America.
He wrote: “In the long run, as Chinese regulators crack down on domestic mining, almost all Chinese crypto mining equipment will be sold overseas.”
After Beijing banned cryptocurrency exchanges in 2017, China has lost its status as a global cryptocurrency trading center.
Jiang Zemin predicted the growth of mining pools in the United States and Europe, “Ultimately, China will also lose its encrypted computing power in foreign markets.”
HashCow, another cryptocurrency miner, owns 10 mining sites in Chinese provinces such as Xinjiang and Sichuan, and sells computing power to investors. The company said it will fully comply with government regulations.
In a statement to customers, HashCow stated that it will suspend the purchase of new bitcoin rigs and promised to refund all investors who have placed orders for computing power but have not yet started mining.
In addition to the absolute scale of the virtual currency crash last week, the Bloomberg Galaxy Encryption Index fell by nearly 40%, the highest level since the turmoil in March last year. The large fluctuations in intraday prices also attracted the attention of investors.
Nevertheless, RBC derivatives strategist Amy Wu Silverman pointed out in a report on Sunday that Bitcoin performs better than Tesla, SPDR S&P 500 ETF Trust or Invesco QQQ based on the Sharpe ratio, which measures risk-adjusted returns. Stock. Trust Series 1.
In a longer time frame (such as the past year), Bitcoin, Ether and meme virtual currencies (such as Dogecoin) are still in the main gains-Dogecoin is about 12,000%.
For Ben Emons, managing director of global macro strategy at Medley Global Advisors in New York, Bitcoin “is consolidating its control over the market through volatility, liquidity and correlation.”