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Selling computers for Bitcoin production in Hong Kong (archive image)
Photo: HOFFORD / EPA-EFE / REX / Shutterstock
The Chinese government is tightening its action against Bitcoin and has put a damper on the price of the crypto currency.
Bitcoin lost around nine percent of its value on Monday after the Chinese authorities stepped up action against so-called miners and turned off more than two dozen computer parks.
In the southwestern province of Sichuan, authorities ordered the closure of 26 bitcoin mines by Sunday, according to Chinese social media.
A former Bitcoin prospector told the AFP news agency: "They've shut everything down."
Gigantic computer farms, which are mainly located in China, are used for the enormous power and computation-intensive mining of the digital currency.
At the same time, Bitcoin in China has been facing considerable headwinds for some time: China has declared payments in the country with digital currencies to be illegal and justified this step with concerns about the financial system and social stability.
It was not until May that Chinese banking associations warned against speculation with crypto currencies and thus sent the Bitcoin price on a downward slide.
In addition to concerns about financial stability, a possible reason for China's tightened action against Bitcoin is that transactions are carried out independently of central banks.
According to analysts, the People's Republic fears the spread of illicit financial flows that are beyond the control of the state.
In addition, China is driving the development of its own cryptocurrency, which is to be flanked by the central bank.
In addition, the tightened action taken by the authorities against the miners could - at least in part - also be due to the immense power consumption in mining, which could endanger climate goals in the People's Republic of China due to the high proportion of electricity from coal.
Before 2030, the country wants to reverse the trend in CO2 emissions and become climate neutral by 2060.
In Bitcoin mining, several provinces had already ordered the closure of so-called mining pools in the past few months.
In the provinces of Inner Mongolia and Qinghai, data centers had already been closed in the past few months;
citizens were called upon to report illegal mines.
Utilities should no longer supply electricity
According to the Bitcoin Power Consumption Index of the University of Cambridge, Sichuan is the most important location for the creation of cryptocurrency in China after the province of Xinjiang in the northwest.
In Sichuan, however, a lot of electricity is generated with the help of hydropower.
In the order of the authorities, which was quoted in the Chinese online networks, the energy suppliers were nevertheless asked to stop supplying the computer parks with electricity.
The deadline expired on Sunday.
The former bitcoin miner told AFP there were on-site inspections.
"They made sure we shut everything down and moved the computers."
The Chinese central bank said on Monday that transactions in cryptocurrencies would disrupt "the normal economic and financial order" and carry the risk of illegal cross-border transfers of assets.
At the same time, the central bank stated that it had recently summoned banks in this regard - including payment service providers such as Alipay.
dab / AFP