Cryptocurrency like Bitcoin, Atherium and Dogecoin all lost plenty of value all of a sudden, what happened?
Back in May Chinese officials reaffirmed an old ban that does not allow financial firms to actively aid in the mining and selling.
At the time, it caused a big dip in crypto values.
On June 21st, that then became more powerful.
Banks and financial service companies met with China's central bank, the People's Bank of China.
The bank explained yeah, you're cutting off all transactions linked to crypto, okay?
In this statement, the central bank said quote, the speculative trading of virtual currencies will disrupt the normal functioning of the economy and the financial market.
It will give rise to risks of illegal and criminal activities such as illegal cross border transfer of assets and money laundering and seriously infringe the property safety of the public.
The lenders involved in the meeting announced that no individuals or institutions are allowed to use their platforms for crypto.
The meeting happened days after Chinese authorities ordered the closure of 26 mining operations in Sichuan.
Sichuan is one of the largest Bitcoin mining centers in China.
So then Dogecoin dropped more than 30% a theory and dropped.
15% and Bitcoin dropped more than 10% cryptocurrency exchange.
Coinbase said the entire market dropped around 12%.
Now back in March, China's inner Mongolia announced plans to ban new cryptocurrency mining and shut down existing activity In Inner Mongolia was responsible for around 8% of mining according to the Cambridge Bitcoin electricity consumption index.
For comparison, the United States the entire country makes up 7.2 2% of global Bitcoin mining, China has been cracking down on crypto for years.
So this whole thing is not exactly new.
In 2019, China banned trading and crypto.
China also does not recognize cryptocurrencies, as legal tender, instead, they're defined as virtual commodities.
Why did this move by China impacts the value of crypto so much?
Well now you've got fewer places you can exchange cryptocurrency for recognised currencies, goods or services.
It also means that institutions may shy away from investing in a cryptocurrency, if the market that accepts it shrinks.
So that's happening.
Why is China doing this?
It could be about the environment.
China has some climate targets that could be missed, due to mining.
It may also be about control.
China is working on its own digital currency.
The digital Yuan has been in development since 2014.
Unlike Bitcoin, digital Yuan is issued by the People's Bank of China.
It's the opposite of Bitcoin, it's centralized.
Who controls the People's Bank of China?
The Chinese government wanna find a bit of good news in this story.
The register reports that after China's latest move, the prices of graphics cards are dropping.
Graphics cards are useful for a lot of things like playing video games, but they're also very, very useful in mining crypto currency, So if you were looking for a GPU, you may have an easier time picking one up at a decent price.
Have you made an investment in crypto?
Let me know your reasons for investing or not.
I'm also i as actor and I'll see you online.
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