Bitcoin fell underneath $30,000 on Tuesday for the first time in five months, hit by concerns over China’s ongoing crackdown on the world’s most popular cryptocurrency.
At about 1230 GMT, bitcoin sank as low as $29,334, a level last seen in January, with analysts citing Chinese efforts to curb trading and mining operations. The unit later stood at $29,590, down 9.25 percent in value. “Concerns mount over China’s ongoing clampdown and fears that widespread acceptance of bitcoin and other digital currencies will be delayed because of concerns about their environmental impact,” said analyst Fawad Razaqzada at trading site ThinkMarkets. Bitcoin also faces a green backlash because mining often uses electricity produced from fossil fuels, he noted. China has broadened a crackdown on its massive cryptocurrency mining industry with a ban on mines in the key southwestern province.
Chinese mines power nearly 80 percent of the global trade in cryptocurrencies despite a domestic trading ban since 2017, but in recent months several provinces have ordered mines to close as Beijing turns a sharp eye to the industry. Authorities in the province of Sichuan ordered the closure of 26 mines last week, according to a notice widely circulated on Chinese social media and confirmed by a former bitcoin miner. Sichuan, a mountainous region in southwest China, is home to a large number of cryptocurrency mines — huge data centres which require a colossal amount of energy.
Bitcoin and other cryptocurrencies are minted by solving puzzles using powerful computers that consume enormous amounts of electricity — much of which is usually produced by coal plants.