China Shuts Down Cryptomining Operators, Issues New Restrictions

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Crypto crumble

Bitcoin
(Image credit: Shutterstock)

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.

Nathaniel Mott
Nathaniel Mott
Freelance News & Features Writer

Nathaniel Mott is a freelance news and features writer for Tom's Hardware US, covering breaking news, security, and the silliest aspects of the tech industry.

23 Comments Comment from the forums
  • digitalgriffin
    As I said multiple times,

    Gov't DO NOT LIKE what they can't control.

    In fact, if you look at it in the USA, Crypto Currency with anonymous wallets violates our own Anti Terrorism laws because it can be used to circumvent money laundering, and funding of illegal activities which can harm the general public. This is why we have giant corporations being shut down by hackers, because it is so hard to trace. And they like it that way. It's also a means of hiding income which is taxable. Even Switzerland caved on US demands and they have some of the strongest privacy rules in the world for banking.

    Plus, The fed adjusting interest rates is a means to control inflation or stimulating the economy. This is taken out of the fed's hands if everything goes Crypto.

    This is why the US Fed AND China is working on it's own crypto currency that doesn't use near the energy, and is fully traceable. When that Crypto hits, Crypto will plummet.
    Reply
  • 2Be_or_Not2Be
    Not that much of a surprise that China didn't quote the negative environmental effect as a factor or the other negative factors (like ransomware demands).
    Reply
  • daworstplaya
    This is great news, the sooner more countries move to ban this monopoly money the quicker gamers can get their hands on GPUs. Crypto has no intrinsic value as it isn't backed by anything except thoughts and prayers.
    Reply
  • InvalidError
    daworstplaya said:
    This is great news, the sooner more countries move to ban this monopoly money the quicker gamers can get their hands on GPUs. Crypto has no intrinsic value as it isn't backed by anything except thoughts and prayers.
    Kind of like the stock market: the value of stocks is whatever people believe they are worth. The value is highly speculative in nature, it can go up or down at the drop of a hat depending on what news come out.
    Reply
  • drinking12many
    "Kind of like the stock market: the value of stocks is whatever people believe they are worth. The value is highly speculative in nature, it can go up or down at the drop of a hat depending on what news come out. "

    And really what is even our normal money based on?? It's based on faith that the US govt is stable and intends to someday pay its debts regardless of the fact to anyone with half a brain that they cannot and will not long term, but the fantasy that they could is what keeps the dollar afloat (and frankly the world economy). Because if they admit otherwise the entire world economy collapses. No, crypto is no more monopoly money than any fiat currency, but the user above is correct it has no intrinsic value...but then again neither does fiat money if you dig into it.. Its all based on thoughts and prayers and it's just a matter of time until the US dollar collapses taking much of the world economy with it.... to me its not a matter of if but when so yeah i will hedge my bets and keep the crypto I have.
    Reply
  • husker
    If the network hash rate has declined because of China's restrictions, then won't that just make mining more attractive for others to pick up the slack? I don't see this as any kind of relief for the gaming GPU market. Perhaps this move has just incentivized people who were waiting for the right time to try and track down a new GPU card to get into mining.
    Reply
  • hotaru.hino
    drinking12many said:
    Its all based on thoughts and prayers and it's just a matter of time until the US dollar collapses taking much of the world economy with it.... to me its not a matter of if but when so yeah i will hedge my bets and keep the crypto I have.
    And when that happens, the value of crypto will plummet as well, because at that point, nobody cares about make believe currency anyway.
    Reply
  • InvalidError
    husker said:
    If the network hash rate has declined because of China's restrictions, then won't that just make mining more attractive for others to pick up the slack?
    Only if there are enough people willing to take the chance spending a fortune on something that could get shut down any day.

    With the number of countries having power generation and distribution issues due to climate change and the severity of those problems increasing each year, I doubt many countries will be willing to inherit the burden of GWh/year scale crypto-mining operations.
    Reply
  • digitalgriffin
    InvalidError said:
    Kind of like the stock market: the value of stocks is whatever people believe they are worth. The value is highly speculative in nature, it can go up or down at the drop of a hat depending on what news come out.

    But companies have REAL assets or income to back them up.
    Reply
  • InvalidError
    digitalgriffin said:
    But companies have REAL assets or income to back them up.
    They aren't really 'backed' though since regular stocks come with no guarantees, no vote, no oversight, no anything. Your stocks are only worth whatever the highest bidder is willing to pay for it at the time of sale and the company has no obligation to buy stocks back from the market at any point in time. If Warren gets her wealth tax and all wealthy people end up having to sell 3-6% of their stocks at the same time to make payment, stock prices will collapse.

    The stock market's valuation is largely fictitious.
    Reply