The price of Bitcoin (BTC) falls due to the crackdown on crypto mining in China

A bitcoin mine near Kongyuxiang, Sichuan, China, on August 12, 2016.

Paul Ratje | The Washington Post | fake images

Bitcoin sank on Monday over reports that China has stepped up its crackdown on cryptocurrency mining.

The world’s largest digital currency fell 7% to a price of $ 32,801 on Monday morning, falling below $ 33,000 for the first time since June 8, according to data from Coin Metrics. It was last trading at $ 32,964 at 5am ET. Smaller rivals like ether and XRP also fell, 8% and 7% respectively.

Many bitcoin mines in Sichuan were shut down on Sunday after authorities in the southwest China’s province ordered a halt to cryptocurrency mining, according to a report by the Communist Party-backed Global Times newspaper. More than 90% of China’s bitcoin mining capacity is estimated to be shut down, the newspaper said.

Bloomberg and Reuters also reported on the move by Sichuan authorities. It follows similar developments in China’s Inner Mongolia and Yunnan regions, as well as calls by Beijing to end cryptocurrency mining amid concerns over its massive power consumption.

This appears to have led to a significant decrease in bitcoin’s hash rate, or processing power, which has dropped dramatically in the last month, according to data from Blockchain.com. It is estimated that 65% of the world’s bitcoin mining takes place in China.

The Bitcoin network is decentralized, which means that it does not have any central party or intermediary to approve transactions or generate new coins. Instead, the blockchain is maintained by so-called miners who rush to solve complex mathematical puzzles using specially designed computers to validate transactions. Whoever wins that race is rewarded with bitcoin.

This energy-intensive process has sparked growing concern about possible environmental damage from bitcoin, and everyone from Tesla CEO Elon Musk to US Secretary of the Treasury Janet Yellen has raised the alarm. China, where the majority of bitcoin mining is concentrated, relies heavily on coal power. Last month, a coal mine in the Xinjiang region flooded and closed, taking almost a quarter of bitcoin’s hash rate offline.

However, miners in China often migrate to places like Sichuan, which are rich in hydroelectric power, in the rainy season. And some industry efforts have been launched, including the Bitcoin Mining Council and the Crypto Climate Agreement, in an effort to reduce the carbon footprint of cryptocurrencies.

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