The Finance Committee in China has announced that it will crackdown on bitcoin mining in the country. The published notice also covers a wide range of other financial risks.
Bitcoin was hit by its second bearish news from China in less than a week.
This time, China’s Finance Committee added bitcoin mining as a key sector to be monitored to “resolutely prevent and control financial risks.”
The meeting was chaired by Liu He, vice-premier of the State Council of the People’s Republic of China. Of the four vice premiers who report to the premier of the State Council, Liu He is the lowest-ranking. He is also the director of the Central Financial and Economic Affairs Commission at the Chinese Communist Party.
The report includes a laundry list of other activities beyond bitcoin mining, including reforming small and medium-sized financial institutions, curbing the impact of illegal securities activities, and “effectively responding to imported inflation.”
China’s State Council about Bitcoin
This is the first time the State Council has explicitly commented on bitcoin mining.
Despite the broad nature of the report, bitcoin plunged -35.51%. The cryptocurrency’s price has since recovered to around $37,800, a loss of nearly 8% in the last 24 hours.
On Wednesday, similar news pulled the leading cryptocurrency down to $30,000. At the time, a group of three payment and finance associations reaffirmed the central bank’s original 2017 ban. The three associations were the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China.
Sources suggest that the latest crackdown on bitcoin mining will be limited to operations that do not use hydroelectric power.
The number of coal-powered mining operations in China is significant. Last month, a flooded coal mine in the Xinjiang region triggered a steep drop in the Bitcoin hash rate, the metric used to determine how much computing power the Bitcoin network uses.