Bitcoin Falls as China Calls for Crackdown on Crypto Mining, Trading

The latest news extended bitcoin's streak of wild price gyrations this week.

AccessTimeIconMay 21, 2021 at 3:15 p.m. UTC
Updated Sep 14, 2021 at 12:59 p.m. UTC
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CORRECTION (May 21, 16:38 UTC): This article has been corrected to clarify that the call for a crackdown came from an official statement summarizing a meeting of a committee of China’s State Council, hosted by Vice Premier Liu He, rather than from comments made by him directly.

Bitcoin fell back below $37,000 on Friday as a top Chinese governmental body called for a crackdown on cryptocurrency mining, amplifying regulatory concerns.

Prices for the largest cryptocurrency by market capitalization dropped to $36,800 from $41,700 during U.S. trading hours, erasing a sizable chunk of the corrective bounce from Wednesday's low of $30,201.

The decline happened after a Chinese government website published a statement summarizing a top-level meeting in which officials called for a crackdown on bitcoin mining and trading activities.

  • Liu He, a Chinese vice premier, hosted a meeting of the Financial Stability and Development Committee of the State Council on Friday. 
  • “We should be more alert and look for potential risks,” according to a statement posted on the website after the meeting. “We should crack down on bitcoin mining and trading activities and prevent individual risks from being passed to the whole society.” 
  • This is one of the most high-profile warnings against cryptocurrencies in recent years. The State Council is the chief administrative authority of China, where heads of cabinet-level executive department make national policies.

The meeting came on the heels of a warning against crypto trading by three Chinese financial industry associations and an intensifying crackdown on bitcoin mining operations in Inner Mongolia, which is one of the mining hubs in North China.

The market mood has recently soured on concerns that corporates may distance themselves from the cryptocurrency amid a growing chorus about the negative environmental impact of bitcoin mining.

"Anti-bitcoin (mining) news regularly comes up, but this is worth monitoring," Thomas Heller, co-founder, and CBO at Compass Mining, tweeted. "Miners in China I've spoken with are unsure of the impact right now."

Last week, Tesla, the Fortune 500 company, suspended vehicle purchases with bitcoin, citing environmental concerns and dashing hopes for widespread corporate adoption. The company announced bitcoin as a payment alternative in February.

The cryptocurrency has been falling ever since and hit a low of $30,000 on Wednesday, marking a major pullback from record highs above $64,000 registered on April 14.

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