London: Battered by China’s crackdown on the world’s most popular cryptocurrency, Bitcoin fell below $30,000 on Tuesday for the first time in more than five months.
Just before 1400 GMT, the price of Bitcoin was about US$28,890, which was the lowest level at the beginning of this year. Analysts said China was working hard to curb trading and mining operations.
Then it rebounded slightly to around US$30,133, with a daily decline of 7.5%.
Since hitting a record high of $64,870 in mid-April, its value has fallen by about 50%.
Fawad Razaqzada, an analyst at the trading website ThinkMarkets, pointed out: “Worries about China’s continued crackdown have intensified and that the widespread acceptance of Bitcoin and other digital currencies will be delayed due to their environmental impact.”
He pointed out that Bitcoin is facing a green rebound because so-called mining usually uses electricity generated from fossil fuels (especially coal).
Bitcoin and other cryptocurrencies are mined by solving difficult problems using powerful computers that consume a lot of electricity.
China has now expanded its crackdown on its huge cryptocurrency mining industry, banning mining in an important province in the southwest.
The scientific journal Nature recently published a study showing that China’s Bitcoin mining farms pose a risk to the country’s climate goals.
Although domestic transactions have been banned since 2017, Chinese mines power nearly 80% of the world’s cryptocurrency trade, but due to Beijing’s critical attitude towards the industry, some provinces have recently ordered the closure of mines.
According to a notice widely spread on Chinese social media and confirmed by a former Bitcoin miner, the Sichuan provincial authorities ordered the closure of 26 mines last week.
Sichuan is a mountainous area in southwestern China with many cryptocurrency mines. Because there are a large number of hydroelectric power plants there, it is basically a huge center, with computer processor racks on top of racks.
“Bitcoin needs to accelerate the transfer of the mining industry out of China,” commented OANDA market analyst Edward Moya.
He added: “The cryptocurrency mining community is eager to get rid of coal-fired power plants, but the loss of clean energy is even more painful.”
Razaqzada said, “As confidence is shaken, it seems that cryptocurrency investors need some new catalysts to encourage them to re-enter-this may be similar to Elon Musk’s influence.”
Since February, Musk has stated on Twitter that once virtual currency obtains a more environmentally friendly certificate, his automaker Tesla will or will not accept Bitcoin as a payment method, which has actually pushed the market many times.
Institutional investors are also interested, as is the online payment website Paypal.
The origin of Bitcoin can be traced back to the 2008 economic crisis, when a person named Satoshi Nakamoto published a nine-page paper called “Bitcoin: A Peer-to-Peer Electronic Cash System”. His true identity is still a mystery.