Bitcoin dropped to $32,288, losing about 7.5 percent of its value, the lowest in a dozen days, as officials in China continued putting the brakes on mining operations, Reuters reported on Monday (June 21).
“Crackdown on Chinese miners might mean that they are offloading coin into a thin market and taking us lower,” said Ben Sebley of London-based crypto firm BCB Group, per Reuters.
In the past six days, bitcoin fell by more than a fifth since its April high of almost $65,000. Despite the volatility, bitcoin gained more than 10 percent so far in 2021.
The cryptocurrency ether, which ranks second by market capitalization, usually fluctuates with bitcoin and lost some 12 percent of its value, the most it lost in almost a month. Ether fell below $2,000 for the first time.
All cryptocurrency mining operations were shuttered by officials in Sichuan on Friday (June 18), following the State Council’s decree in May to halt bitcoin mining and trading in the country. Overall, China is responsible for over 50 percent of bitcoin production in the world.
Crypto miners tend to move operations to the southwest province of Sichuan during the rainy summer months to tap the region’s hydropower resources, Reuters reported, citing data from the University of Cambridge. The area has the second-largest mining operation in the country.
Mining firms usually hold a large amount of cryptocurrency and large-volume sell-offs trigger price drops, according to Reuters.
China’s crackdown on bitcoin mining follows the country’s move to clip banks’ ability to offer cryptocurrency services. With less bitcoin being mined, scarcity should have triggered a price surge — but instead, the coordinated effort of shutting down mining operations so far has had the opposite effect.
Indonesia’s central bank banned the use of cryptocurrency for payments last week as the country moves to further curtail crypto-related activities. Crypto is still permitted for trading as commodities.