China Government Places Limitations on Cryptocurrency

Carlos Chirino, Staff Writer

On Sept. 24, 2021, the People’s Bank of China banned all business-related cryptocurrency actions. In the statement on their website, “Virtual currencies such as Bitcoin, Ether, and TED are not legally reparable, and should not and cannot be used as currency in the market” (in translation). Shortly after this statement was released, Bitcoin fell in price by almost 10%, but it quickly recovered throughout the rest of the day. The reason behind the ban of crypto, according to the People’s Bank of China’s website, is, in translation, “Recently, virtual currency trading hype activities have risen, disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, seriously endangering the safety of people’s property.” China’s ban on crypto will harm the cryptocurrency market because China is known as one of the best places to mine bitcoin or other cryptocurrencies. According to The Wall Street Journal, “China became a major market for bitcoin mining due to its cheap electricity, specifically in the coal-rich regions.” Due to having cheap and affordable electricity costs in China, it housed the majority of the cryptocurrency miners. According to the University of Cambridge, “In April 2021, 47% of all crypto-mining happened in China.” However, with the new change by the state-owned People’s Bank of China and previous bans in provinces, many miners will move to other places. This leaves a pressing question looming. Who is going to be the new powerhouse of bitcoin?