How will China’s tightening regulations affect Bitcoin?

As China ordered a general ban on crypto assets for private companies on June 21, 2021, the price of bitcoin on the 22nd marked $30,000, less than half of its April high. The impact of China’s tightening of regulations on crypto assets is spreading not only to the price of Bitcoin, but also to the entire economy surrounding Bitcoin.

On June 21, the People’s Bank of China ordered commercial banks and major payment companies such as Alipay to almost completely suspend crypto asset trading and payment crypto asset-related services. Then the next day, the Bitcoin exchange rate showed a price trend that temporarily fell below the high point of $30,000.

In May 2021, it was reported that the Chinese government would completely ban bitcoin mining and trading, and in China, bitcoin mining operators one after another withdrew from the mining sector. Kevin Zhang, vice president of business development at Chinese crypto-asset mining consulting firm Foundry, said on the 23rd that his colleague sent a technician to Shenzhen to test, repair, clean and pack the used mining system for shipment. He also tweeted that he had cleaned and sent over 20,000 ASICs for mining in two weeks. A video showing the equipment that appears to have been used for mining was packed in corrugated cardboard and stacked on pallets for shipping.

According to him, 70% of Chinese mining companies went offline as of the 23rd, and 90% is expected to be offline by the end of the month. According to Chinese reports, server racks at the mining site located in Sacheon are also empty.

These influences are beginning to surface in numbers. According to The Block Research, a market research firm specializing in crypto assets, the hash rate, which indicates mining power, has dropped by almost half in one month. If you look at the fluctuations in hash exchange rates at major mining farms in China, it was 168,000 per second on May 15th, but it decreased to 86,000 per second on June 23rd.

According to reports, 65% of global hashrates as of April 2020 were from China. The impact of mining in China is coming to the fore in the form of a 75% drop in the price of mining equipment. Related information can be found here.