China is single-handedly undermining the crypto market as it forced widespread closures of mining operations across the country, leading to a decline in the network hashrate for both Bitcoin and Ethereum. In fact, according to China's Global Times, one province has had 90% of its Bitcoin mining capacity shut down. Coindesk also reported that The People's Bank of China (PBOC) had issued new restrictions preventing banks from offering any services that facilitate transactions involving cryptocurrencies. So naturally, the value of both Bitcoin and Ethereum tumbled in trading today.
A translated version of the PBOC statement claimed that "virtual currency trading speculation activities disrupt the normal economic and financial order, breed the risk of illegal and criminal activities such as illegal cross-border asset transfer and money laundering, and seriously infringe on the property safety of the people."
The value of Bitcoin, Ethereum, and other coins promptly fell after the announcement. Bitcoin's price has fallen by roughly 4% at the time of writing, according to the Coindesk price index, and the price of Ethereum is down more than 6%.
Both cryptocurrencies were already suffering from Chinese regulations. Reuters said authorities in Sichuan told miners on June 18 to shut down by June 20; Bloomberg reported that day that Bitcoin and Ethereum prices fell a respective 5.5% and 5.9%.
Sichuan's crackdown followed Inner Mongolia, Qinghai, Xinjiang, and Yunnan in banning crypto mining. Those are the most productive mining provinces in the most productive ming country globally; no wonder the market is spooked.
Cryptocurrency mining operations might be able to relocate to avoid China's regulations—El Salvador is particularly keen to embrace Bitcoin—but for now, they appear to be shut down entirely. It'll probably take some time to recover from that.
The declining value of leading cryptocurrencies might be good news for hardware enthusiasts, however, with ASRock saying last week that waning demand from mining operations could lead to lower prices for supply-constrained graphics cards.