Bitcoin (BTC) and Ethereum (ETH) Plunge as China's Crackdown on Mining Intensifies, One-Third Of Global Processing Power Now Shut

June 21, 2021 7:00 AM EDT

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Bitcoin (BTC) price is trading over 8% lower on Monday to plunge below $33,000 and print the lowest levels seen in the past 2 weeks. Ethereum (ETH), the world’s second-largest cryptocurrency, is down over 12% to now trade below the $2,000 mark again.

Bitcoin price initially moved lower on Sunday on reports that China extended its regulatory crackdown on mining activities to the province of Sichuan. As a result, there has been a significant decline in bitcoin’s hash rate, or processing power.

It is believed that local authorities ordered a halt to mining in the region on Friday. As a result, over 90% of mining activity is estimated to be shut down by now.

"The exit window is closing, and we're scrambling to find overseas mines to place our mining devices," a Sichuan-based industry expert told local Global Times.

Regulators ordered local electricity companies to "screen, clean up and terminate" mining operations by Sunday. As many as 26 business entities found themselves on the list for inspection.

"We had hoped that Sichuan would be an exception during the clampdown as there is an electricity glut there in the rainy season. But Chinese regulators are now taking a uniform approach, which would overhaul and rein in the booming Bitcoin mining industry in China," Shentu Qingchun, CEO of Shenzhen-based blockchain company BankLedger told the Global Times.

"That means that more than 90 percent of Bitcoin mining capacity, or one-third of the global crypto network's processing power, will be suspended in the short term. As a result, Chinese miners must form alliances to migrate overseas, to places such as North America and Russia.”

Bitcoin price is now likely to target a further move lower to $30,000 where the January lows are located.

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