Chinese authorities intend to take action on cryptocurrency mining and bitcoin trading. This was stated by Vice Premier of the State Council of the People’s Republic of China Liu He during a speech at a meeting of the Committee on Financial Stability and Development.
Stricter supervision is needed to protect the financial system, he said. He called on regulators to promote the development of the real economy, as well as to “resolutely” prevent and control financial risks.
The official said that it is necessary “to combat bitcoin mining and trade, as well as to prevent the transfer of individual risks to the social sphere.”
Bitcoin reacted with a drop of 8%. The price of digital gold at the moment dropped below $36,000 (on the Binance exchange).
At the time of writing, the cryptocurrency is trading at $35,000.
He’s statement came days after three associations at the People’s Bank of China banned local companies from supporting digital assets-related businesses and encouraged citizens to refrain from investing in this class of financial instruments.
Journalist Colin Wu noted that for the first time, top-level Chinese officials propose to ban cryptocurrency mining directly. He believes this may be due to the industry’s high energy consumption.
According to a recent study, mining centers located in China will consume over 296.59 TWh of electricity by 2024 and will overtake the Philippines in terms of greenhouse gas emissions.
According to co-founder of the mining company Compass Mining, Thomas Heller, the Chinese colleagues with whom he spoke are not sure how He’s statement will affect the market.
A well-known trader under the nickname Whale Panda believes that the industry will only benefit from the actions of the PRC authorities: mining will become more decentralized, the black market in bitcoin will flourish, and the “false narrative” about the control of digital gold in China will disappear.
Earlier, China CITIC Bank banned individuals and legal entities from using accounts to buy and sell cryptocurrencies.
In April 2021, China proposed treating cryptocurrencies like bitcoin as investment vehicles.
Recall that Hong Kong plans to ban bitcoin exchanges from operating without a license and offer services to retail investors.