Bitcoin’s price has fallen once again following news from China. The Asian country says its regulatory authorities will begin cracking down on all mining and trading activities.
China Seeks to Limit Trading and Mining
The country has always had a rather up and down relationship with the world’s number one digital currency by market cap. At one point, there was more bitcoin activity occurring within China’s borders than any other region. China is also home to both Bitmain and Canaan Creative – two of the world’s largest crypto mining firms.
However, things took a real ugly turn about four years ago when China said that it would be banning all initial coin offerings (ICOs), claiming that they were illegal and fraudulent. From there came a ban on all digital currency exchanges, prompting many companies to move elsewhere and now, with this new crackdown on mining and trading in general, it is hard to say if China is going to lose its top spot as a bitcoin and crypto haven.
Financial authorities are claiming that crypto is far too risky for traders. These maneuvers are designed to eliminate said risks and keep potential users protected. In a statement, they mention:
It is necessary to maintain the smooth operation of the stock, debt and foreign exchange markets, severely crack down on illegal securities activities and severely punish illegal financial activities.
At first glance, it looks like bitcoin cannot catch a break as of late. The currency has been on a downward spiral for the past two weeks following news that Tesla would not be accepting bitcoin payments after all. From there, Elon Musk – the company’s CEO – hinted on Twitter that he would potentially be selling his personal stash of BTC, which prompted another major drop for the digital asset.
Now, with this latest news from China, bitcoin has fallen to about $36,000 per unit – its lowest point in months. However, while bitcoin looks like it may be suffering substantially at the time of writing, it can be argued that China stands to lose a lot more from this action than bitcoin traders do.
This Is Going to Hurt the Country
As mentioned, China is home to Bitmain and Canaan Creative. With a hardcore crackdown on mining, these companies are likely to suffer… Which means less income… Which means less taxes towards China’s economy and infrastructure, and the country in many ways is still reeling from the tariffs of the previous U.S. administration.
In addition, China is home to most of the world’s bitcoin mining operations. It is estimated that close to three quarters of the globe’s bitcoin mining projects are centered in China. If the country is looking to shut down mining for good, these companies will have no choice but to travel elsewhere, which is going to result in less profit for China either through reduced taxation – granted these operations are legal – or nonpayment of energy bills.