Cryptocurrency update: BTC slides as China intensifies mining crackdown
Bad news for Bitcoin. Earlier Chinese efforts to limit crypto mining have turned into a full-scale purge, hitting BTC prices with a significant body blow.
Bitcoin tumbles as China puts the squeeze on crypto mining
China has intensified its crackdown on cryptocurrency mining operations sending Bitcoin reeling.
As of Monday 21st June, BTC was trading for around $32,000 – some $32,000 lower than the $65,000 highs seen in April. Just last week, Bitcoin had climbed to around $40,000, but China’s efforts to curb mining activity has stunted recovery.
Authorities in China’s key crypto mining provinces are following Inner Mongolia’s lead by banning the energy-hungry practice. China has major climate change goals, so limiting mining for digital tokens from energy consumption chains is part of the strategy to reduce its CO2 emissions.
Every year, crypto mining globally consumers more energy than Sweden.
China is not content with limiting or halting mining operations. In May, the government moved to ban financial institutions and payment companies from providing services related to cryptocurrency transactions. Authorities also warned investors against speculative crypto trading.
The hash rate, the rate at which new Bitcoin tokens are minted, has dropped considerably with these latest measures. Bitcoin tokens are already scarce, it’s partly what gives them value, but authorities moving against miners, and kicking them out of China, is the real issue here.
China’s authoritarian stance is not unexpected – it’s a government that thrives on control of pretty much every industry – but it fits into a wider cautionary attitude displayed by regulatory bodies and governments worldwide.
We’ve heard Governor Bailey of the Bank of England speak out against cryptocurrencies, for example. Regulators in Thailand, India, and Turkey have been mulling over full-on bans too. Retail crypto trading is unavailable for UK customers.
While institutional support from banks and corporations like Tesla continues to mount, it’s being met by stiff resistance from governments.
How can Bitcoin recover? No doubt miners will be setting up shop elsewhere. El Salvador has an ambitious plan to turn itself into Central America’s crypto mining hub, harnessing the geothermic power of volcanos to run its mining operations. Will we see a spike in El Salvador-sourced tokens?
Bitcoin has been struggling to regain its massive April gains across May and June. It looks like its path to recovery just got longer.
Over 90% of UK financial advisors would avoid cryptocurrency
A survey of UK independent financial advisers (IFAs) undertaken by Opinium reveals 93% would never recommend investing in cryptocurrency to their clients.
A further 91% said they would be concerned if they were investing in such assets.
Retail clients are unable to trade digital tokens in the UK anyway, but this is still an interesting development. According to Opinium, crypto’s inherent volatility and close regulatory scrutiny turn IFAs against cryptocurrency investing.
Only a third of those surveyed said they had noticed an increase in interest regarding crypto trading and investing.
A new crypto unicorn emerges
A new unicorn, a tech firm valued at a minimum of $1bn, has emerged in the cryptoverse.
Amber Group (AG), an Asian crypto trading and technology firm, is the latest subject of venture capitalist interest, as they continue to pour capital into the space.
The Group dubs itself as “an integrated crypto financial services firm that offers 24/7 services ranging from market making to asset management and structured products”.
It passed the $1bn mark after a successful investment round raising $100m from China Renaissance, with participation from Tiger Brokers, Tiger Global Management, and other new investors. Its existing investors, such as Pantera Capital, Coinbase Ventures, and Blockchain.com have also joined the round.
Michael Wu, Co-Founder and CEO of Amber Group, says the company now accounts for 2%-3% of total trading volumes in the crypto spot and derivative market. AG’s cumulative trading volumes have doubled from $250bn since the beginning of the year to over $500bn as of June 2021.
“We have been profitable since inception, and with growing revenues across all business lines, we are now annualizing USD 500m in revenues based on January to April 2021 figures,” Wu said in an announcement.