China has decided to attack strongly by banning all cryptocurrency transactions. The Central Bank of China said on Friday, September 24, that foreign exchange platforms can no longer offer their services to Chinese residents. This regulation comes after the decision last May to ban Chinese financial institutions from providing services related to cryptocurrencies.
The price of Bitcoin fell to around $ 41,000 in the wake of this new restriction. However, China does not intend to pass up the digital currency train. You just want to control and centralize the system. The government is preparing to create a central bank-piloted national digital currency, the first tests of which are scheduled for early 2022.
Dismantle mining activities
The regime also seeks to dismantle all mining activities (transaction processing and creation of cryptocurrencies through mathematical calculations using computing capabilities) of cryptocurrencies on its territory. One of the goals of China’s mining is to contain the energy expenditure associated with these activities. In fact, cryptocurrency mining has become excessively energy-intensive, insofar as the robustness of the system is based on the difficulty of performing the mathematical calculations on which the completion of transactions depends.
The complexity of the calculations increases over time to contain inflation and today the necessary computing power is impossible to achieve for a single individual. Mining is carried out through true industrial sites that dedicate all their capacity to it and that require a significant amount of electrical energy. However, China is making efforts to reduce its greenhouse gas emissions. It rations other heavy industries to do so, such as the production of aluminum, iron and steel.
China, second largest cryptocurrency country
According to a study cited by Bloomberg, in April China was home to 46% of the computing capacity related to cryptocurrency mining. Another statistic, relayed by the Financial Times, estimates that 150 million dollars came to inflate the cryptocurrency portfolios of the Chinese in the first half of 2021, making the country the second largest holder of cryptocurrencies behind the United States.