Bitcoin reached the level of 32,094 dollars, the lowest in the last 12 days, pulling down the smaller currencies as well. Bitcoin had fallen by up to 8.3%, heading for the biggest decline in a day in the last month, according to Reuters .
The largest cryptocurrency, long affected by volatility, has lost over 20% in just the last six days and is halfway to its peak in April of almost $ 65,000. But even so, it has gained over 10% this year.
The drop comes amid tightening restrictions on cryptocurrencies in China, where authorities in the southwestern province of Sichuan on Friday ordered the closure of bitcoin mining projects.
The State Council, China’s executive, promised last month that it would step in to shut down mining and trading in virtual currencies as part of a series of measures to control financial risks.
China, the world center of bitcoin mining
Although mining data is scarce, bitcoin production in China last year accounted for almost 65% of global production, according to data from Cambridge University, with Sichuan being the second largest producer.
Companies that mine bitcoin – a process that consumes a lot of electricity – normally hold a large number of virtual currencies, and any movement to sell huge quantities leads to lower prices.
“The restriction on Chinese miners could mean that they sell the currency in a devalued market and take us down,” says Ben Sebley of London-based cryptocurrency company BCB Group.
China’s central bank said on Monday it had recently called on banks and payment institutions to take more action to ban cryptocurrency trading.
The Agricultural Bank of China, the third-largest creditor by assets, said it was following the guidance of the People’s Bank of China and would check customer records to uncover illegal activities involving crypto mining and transactions.
A smaller rival to bitcoin, ether, which tends to move along with bitcoin, has fallen by up to 12%, falling below $ 2,000 for the first time in almost a month.
Reducing cryptocurrency to achieve climate neutrality goals
Sichuan is a province rich in hydropower, according to the Financial Times . The Chinese province was used as a last resort for mining operations, after being driven out of provinces that depend on coal-fired electricity.
Governments in top cryptocurrencies – Xinjiang, Yunnan and Qinghai – announced plans to dismantle mining operations this month.
Local governments are under pressure from Beijing’s central government to reduce energy intensity – carbon dioxide emissions per unit of GDP – China wants to reach peak greenhouse gas production by 2030 and become “neutral” in terms of of carbon emissions by 2060.