- The Chinese government has continued to warn against trading and investing in cryptocurrencies as part of its nationwide crackdown.
- An official from the country’s central bank restated that Bitcoin and other digital assets are not legal tender and have “no value.”
- Since the ban of crypto mining in China, Bitcoin miners in North America have benefitted from an increased market share.
An official from the Chinese central bank has reiterated the risks that cryptocurrencies pose to its citizens and has warned the public to stay away from the digital asset market to protect their capital. While China’s crackdown on crypto mining brought prices down, it also opened up opportunities for the sector’s growth in other jurisdictions.
China working to ensure crypto-related operations are halted
As part of the Chinese government’s plan to eliminate the use of cryptocurrencies in the country, the deputy director of the Financial Consumer Rights Protection Bureau of the People’s Bank of China (PBoC), Yin Youping, said the new asset class is nothing more than investment speculations. He further warned the public to stay away from any digital asset-related transactions.
Yin reminded citizens that cryptocurrencies such as Bitcoin are not legal tender and have “no actual value.” He stated that investors should protect their capital by staying away from digital assets and increasing their awareness of the risks involved with the new asset class.
The Chinese central bank has been taking new measures to ensure that digital asset trading operations are ceased. The PBoC is also working with other regulators to crack down on overseas exchanges, trading websites, applications and corporate channels in the country.
Yin added that the next step for the central bank would be establishing a normalized working mechanism to ramp up the pressure on illegal crypto operations and continuing to crack down on digital asset transactions in the country.
Local municipalities, including Yingjiang County, have also taken measures to halt crypto-related activities. Regulators from the county requested hydropower plants to cut the power supply for Bitcoin miners in the area. This move follows a large number of miners being squeezed out of their operations in May, which caused prices to crash when miners were rushing to sell their digital assets.
As a result, miners outside of China were given the opportunity for growth. North American mining companies have seen a surge in demand for facility hosting space as they began to take up a larger portion of the Bitcoin network hashrate as Chinese miners increasingly went offline.
According to Bitfarms CEO Emiliano Grodzki, since the cryptocurrency mining ban in China, 50% of the network hash rate was shut down, allowing his firm to increase its market share from 1% since the beginning of 2021 to above 1.5% in Q2.
Riot Blockchain also witnessed increased mining revenue by 35% QoQ to a record high of $31.5 million in Q2.
Since active miners have decreased in China, the global hashrate also followed, positively impacting the number of blocks firms could win, according to Marathon Digital Holdings CEO Fred Theil. The company also recorded a revenue bump of 220% in Q2 compared to the previous quarter.
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