Daily Management Review

Tough Chinese Stand Forces Crypto Miners To Halt China Business


Following the announcement by Chinese authorities about a crackdown on bitcoin mining and trading, crypto currency miners have halted their China operations. The crypto currency mining firms include HashCow and BTC.TOP. This decision hit the value of the digital currencies in the backdrop of greater regulatory scrutiny globally on them.
The crackdown was announced late last Friday by a Chinese State Council committee led by Vice Premier Liu He. This is the first time that virtual currency mining has been targeted by the council. Crypto currency mining is a big business in China and such operations there account for as much as 70 per cent of the total supply of crypto currencies of the world.
Suspension of its crypto mining services to mainland Chinese clients was announced on Monday in a statement by Huobi Mall, part of cryptocurrency exchange Huobi. The firms said instead its operations and services would be focused on overseas clients.
Suspension of its China business citing regulatory risks was also announced by BTC.TOP, a crypto mining pool. Halting of purchasing new bitcoin rigs was also announced by crypto miner HashCow.
Very powerful and specially designed computer equipment or rigs are used by crypto miners for verification of virtual coin transactions in a process that leads to production of newly minted crypto currencies such as bitcoin.
"Crypto mining consumes a lot of energy, which runs counter to China's carbon neutrality goals," said Chen Jiahe, chief investment officer of Beijing-based family office Novem Arcae Technologies.
He added that the strict scrutiny of crypto mining in China is part of the country’s increased pro-activeness to curb down on speculative crypto trading.
The latest move in Chinese has battered bitcoin and currently the value of the crypto currency is almost 50 per cent lower than its all-time high value. Its value dropped by as much as 17 per cent on Sunday before making up some of the losses to set a steady trading value in Asia., 
For global financial regulators, the major concerns related to crypto currencies include protection of investors’ interests and money laundering as regulators worldwide struggle to find ways to regulate the crypto currency industry.
This latest tirade against crypto currencies started with the United States where the US Federal Reserve Chairman Jerome Powell had said last Thursday that the crypto currencies posed a risk to financial stability. His comments seemed to indicate the regulators there warranting increased regulation of the increasingly popular electronic currency.
According to a study recently published in Nature Communications, the total energy consumed by crypto mining in China is forecast to reach a peak in 2024 and is expected to be at about 297 terawatt-hours which would be higher than all the energy consumed by Italy in 2016.
After China nabbed crypto exchanges in 2017, the position of being the global crypto currency trading hub was lost by the country.
"Eventually, China will lose crypto computing power to foreign markets as well," BTC.TOP founder Jiang wrote in a micro blog post via Weibo, and predicted growth of crypto mining pools in the US and Europe.