China accounts for nearly 70 per cent of the world’s cryptocurrency mining, a complex process to produce new crypto coins that involves sophisticated computers solving cryptographic math problems to verify each digital transaction.
On Friday, the Financial Stability Development Committee of the State Council in China led by vice premier Liu He announced a crackdown targeting virtual currency mining, leading to ripple effects in the whole crypto market with Bitcoin falling by nearly 50 per cent from it’s all-time high, and by as much as 17 per cent on Sunday.
The events follow an earlier announcement by China of a crackdown on the use and trading of virtual currencies within the country, banning financial institutions and payment companies from providing services related to cryptocurrency transactions.
Experts had already predicted that the crackdowns could make it more difficult for people to buy cryptocurrencies in China, and throw up more hurdles for miners to exchange the virtual coins for Yuan.
“Due to recent dynamic changes in the market, in order to protect the interests of investors, a portion of services such as futures contracts, ETP, or other leveraged investment products are temporarily not available to new users from a few specified countries and regions,” said a statement shared by Huobi with CoinDesk.
Huobi has said it would also suspend the sale of crypto mining machines and mining hosting services in mainland China, adding that it would soon provide more details on what to do with the machines.
BTC.TOP, a crypto mining pool, also announced that it would suspend its China business due to regulatory risks, hinting that it would conduct its crypto mining business henceforth in North America.
Another crypto mining company, HashCow, also said it would suspend buying new mining rigs, adding that it would offer full refunds to those who had placed orders but had not yet started minting new bitcoins, Reuters reported.
“In the long term, nearly all Chinese crypto mining rigs will be sold overseas, as Chinese regulators crack down on mining at home. Eventually, China will lose crypto computing power to foreign markets as well,” BTC.TOP founder Jiang Zhuoer said in a post on Weibo.