Chinese cryptocurrency miners Huobi Mall and BTC.TOP announced on Sunday that they have suspended their operations on mainland China after the country escalated its crackdown on bitcoin mining and trading activities, contributing to a slump in the cryptocurrency markets.
A meeting of the State Council’s Financial Stability and Development Committee declared on Friday that tougher regulation is required to prevent and control financial risks. The official statement from the conference expressed the necessity to “suppress bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field”.
This is the first time the financial regulatory body has issued a call to arms regarding digital currency mining.
The meeting was chaired by Chinese Vice Premier Liu He, who signed a trade deal with former US President Donald Trump last year in efforts to ease an economic struggle between the two nations.
Huobi Mall, part of cryptocurrency exchange Huobi, said in a statement that it decided to stop selling mining machines and providing relevant services to mainland Chinese clients. “We will actively cooperate with Chinese authorities to execute regulatory measures,” said the company.
According to data compiled by BTC.com, Huobi’s bitcoin hash rate has dropped 18.9% from Sunday. The firm saw its Hong Kong-listed stocks plummet 22% to HK$14.66 per share on Monday.
Crypto mining pool BTC.TOP’s founder Jiang Zhuoer announced in a Weibo post that the company would cease operations for its China business due to regulatory risks, adding that in the future it will mainly conduct its crypto mining operations in North America.
“In the long term, nearly all Chinese crypto mining rigs will be sold overseas, as Chinese regulators crack down on mining at home. Eventually, China will lose crypto computing power to foreign markets as well,” Jiang wrote.
Crypto miner HashCow also said it would halt buying new bitcoin rigs, adding that it would offer full refunds to those who had placed orders but had not yet started minting new bitcoins, Reuters reported.
Bitcoin’s price fell as much as 13% on Sunday, at one point trading at around $33,000 per coin — far below its all-time high of more than $64,000 just over a month ago. Other cryptocurrencies also suffered huge losses over the weekend, with Ethereum dropping roughly 20% Sunday evening and Dogecoin down about 30%.
On Wednesday, a broad crypto crash wiped out about $1 trillion in market value. The brutal selloff came after the Chinese government imposed new restrictions on cryptocurrency transactions the previous day. Bitcoin plunged 30% to its lowest level since late January, at one point bottoming out at roughly $30,000. Ethereum fell more than 40%, while dogecoin lost around 27%.
Apart from concerns over the volatile nature of the crypto markets, the massive carbon footprint created by crypto mining is another issue Chinese authorities have attempted to address.
China currently accounts for nearly 70% of the world’s cryptocurrency mining. According to a study recently published in scientific journal Nature Communications, the annual energy consumption of China’s cryptocurrency miners is expected to peak in 2024 at about 297 terawatt-hours, greater than the total power consumption of Italy in 2016.
Earlier this year, the government of Inner Mongolia, a northern Chinese province brimming with coal, ordered a halt to the construction of new cryptocurrency mining projects, and vowed to shut down all existing mining farms. Relying on its cheap electricity as well as its cool and dry climate, the region has attracted clumps of miners over the years and contributes about 8% of combined global bitcoin mining computing power.
On Tuesday, the region announced that it will set up a dedicated hotline for residents to report neighbors they suspect of being cryptocurrency miners, as part of an effort to “comprehensively clean up and shut down” these power-hungry operations.