China bitcoin miners activities in the country are being seriously disrupted after several crypto mining firms halted their operations in the country. This latest setback for bitcoin comes as the crypto market is being dealt blow after blow, causing major turmoil that’s not been seen since the beginning of this year.
Some of the firms that ceased their operations include Huobi Mall, an affiliate of the Huobi Exchange, and BTC.TOP. The firms cited heavy regulations and scrutiny directed at Bitcoin mining and trading activities by Beijing as the main reason for closing shop.
Digital currency mining is a booming sector in China, with the country accounts for almost 70% of the global crypto supply. According to a Friday announcement, a State Council Committee spearheaded by Vice Premier Liu He explicitly targeted the crypto mining sector for the first time.
Shifting to Overseas Markets
Mining firms that have now stopped their operations in Beijing are focusing on expanding to other global markets. In a statement on Sunday, Huobi Mall announced that it was “contacting overseas service providers, to pave way for exports of mining rigs in the future.”
Meanwhile, BTC.TOP announced the suspension of China operations, after which they will primarily focus on their crypto mining operations in North America. The firm also cited regulatory risk as the main reason behind its decision.
China has already lost its dominance in cryptocurrency trading after Beijing halted the operations of crypto exchanges in 2017. According to Jiang Zhuoer, the founder of BTC.TOP, China will soon lose its crypto hash power dominance to other markets such as the US and Europe.
HashCow, another crypto mining firm with 10 mining sites in China, said that it would suspend the purchase of new Bitcoin rigs and refund investors who had already placed an order for computing power but had not yet commenced mining activities.
Implications on Crypto
Bitcoin crashed after the move by Chinese mining firms to halt operations in the country. Bitcoin has lost almost 50% since the token surged to an all-time high of $63,500 last month. After the Sunday statement out of China, Bitcoin lost around 17% of its value before a slight recovery. It was trading at $36,000 at the time of writing.
However, the extreme crypto market volatility at present is not expected to stop any time soon. Regulators in the US and elsewhere are still pondering how to regulate cryptocurrency trading to curb money laundering and protect investors.
More regulations are expected in the US after Jerome Powell, the US Federal Reserve Chairman, said that cryptocurrencies were a threat to financial stability, and therefore, more regulations were needed. If such regulations are introduced, Bitcoin and the entire crypto market might be expected to tumble again, although it could also remove an element of uncertainty from the equation.
However, the market turmoil has not completely wiped out all the achievements of Bitcoin and altcoins since the beginning of the year. Bitcoin, and to a lesser extent a number of top altcoins, continue to show relative resilience compared to the rest of the market, with traders buying the dip providing at least some temporary price stabilization.
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