Bitcoin dropped 8% on Monday after Chinese authorities ramped up their crackdown on cryptocurrency “mining” over the weekend, with bodies in the Sichuan province ordering 26 of the biggest miners to halt operations.
The world’s biggest cryptocurrency fell to $32,950 as of 6.20 am ET. Bitcoin was down around 49% from April’s record high of close to $65,000, but was still roughly 12% higher for the year.
Other cryptocurrencies also dropped sharply, with ether down around 6% and binance coin roughly 4% lower, according to Coinmarketcap. A broader market sell-off also appeared to be weighing on crypto, as investors moved towards safer assets.
The latest move by Chinese authorities to restrict bitcoin mining came in the southwestern Sichuan province over the weekend, when bitcoin miners were told to “clean up and terminate” their operations. Sichuan authorities said 26 bitcoin mining companies must be closed down on Sunday, according to a notice seen by the South China Morning Post.
Chinese state media outlet Global Times then reported that more than 90% of China’s bitcoin mining capacity was estimated to be closed down, at least for the short term, on Sunday.
Bitcoin mining-whereby computers solve complex puzzles to secure the network and mint new coins-has become a target in increasingly climate-conscious China because of the huge amounts of energy it uses.
Sichuan’s clampdown followed similar moves by authorities in Xinjiang, Yunnan and Qinghai.
“The dominant driver of bitcoin right now is the crackdown on mining & trading in China that began in May,” Michael Saylor, a leading bitcoin bull and chief executive of tech firm MicroStrategy, wrote on Twitter.
“This created a forced & rushed exodus of Chinese capital & mining from the bitcoin network,” Saylor said, describing this as “a tragedy for China and a benefit for the Rest of the World over the long term.”
Jeffrey Halley, senior market analyst at currency group Oanda, said the broader drop in risky assets following the Federal Reserve meeting was also weighing on bitcoin. Stocks have sold off after Fed officials on Wednesday moved forward their estimates of when the US central bank would have to raise interest rates.
“If, as I expect, the global buy-everything unwind continues this week, bitcoin will feel those chill winds as well,” Halley said.