Bitcoin drops by 7% amid China crypto mining ban

The value of cryptocurrency asset Bitcoin has fallen by seven per cent after China has announced plans to restrict cryptocurrency activities in the country further.

“Virtual currency is a specific virtual commodity that is not issued by the monetary authority, and it is not legally compensatory and compulsory. It is not a real currency and should not and cannot be used as currency in the market,” said the National Development and Reform Commission spokesperson Meng Wei during a press conference on bitcoin mining on Tuesday in Beijing.

Ms Meng added that the NDRC would launch a “full-scale” clampdown on cryptocurrency mining by strengthening regulations on virtual currency mining, focusing on industrial and centralized mining, as well as state-owned businesses that mine virtual currency.

The price of bitcoin fell after the press conference, dropping by over seven per cent to $60,889. Ether, the second-largest digital token after bitcoin, also dropped more than 8 per cent on Tuesday to $4,297, the worst level recorded in two weeks.

Ms Meng noted that the commission would increase electricity prices for any institution found participating in crypto mining.

This announcement came amid China’s attempt to meet its target to become carbon neutral by 2060. Crypto mining is energy-intensive and consumes a lot of computer power. China is also struggling with a severe power shortage, which has affected millions of households and factories with power rationing.

China banned cryptocurrency exchanges and transactions earlier in the year, raising concerns about mining’s effect on the environment. The government of the former largest cryptocurrency market has been clamping down on the trade since 2019.