Bitcoin crashes
After yet another Chinese crackdown
How much power does China have over crypto?
Welcome to China Uncensored.
I’m Chris Chappell.
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Speaking of crashes, Bitcoin!
After hitting a mid-April high of 65,000 dollars, the price of bitcoin tumbled below 30,000
dollars.
And China is to blame.
You see, the Chinese Communist Party doesn’t like Bitcoin.
For one, the Party can’t control it.
And for two, the Chinese regime is spending big to create its own digital currency.
Which it would control.
Ironically though, China is where most of the bitcoin mining happens, particularly here
in Sichuan Province.
Basically, enormous computer banks are used to verify bitcoin transactions, and you get
rewarded with bitcoin.
It’s an energy intensive process.
And thanks to China’s massive reliance on coal, China has the energy to fuel it.
Until this week, when Chinese authorities ordered 90% of China’s Bitcoin mining operations
to shut down.
Local electric companies in Sichuan were ordered “to immediately stop supplying power to
crypto mining projects.”
And “local authorities [were banned] from approving new mining projects.”
But that’s not all.
The Chinese regime isn’t just going after Bitcoin miners.
They’re also going after people who use it.
And they’re getting major Chinese banks to help.
I’ll explain more after the break.
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So 90% of China’s Bitcoin mining has been shut down.
There’s actually a big silver lining to that, which I’ll get to in a moment.
But the Chinese Communist Party is also getting major Chinese state-run banks and so-called
private Chinese companies involved in the latest crackdown.
The People’s Bank of China summoned these groups “and told them to ‘strictly implement’
recent notices and guidelines from authorities on curbing risks tied to bitcoin and cryptocurrency.”
And in China, the main risk tied to Bitcoin is using it.
Financial firms were told to identify customers using or trading crypto.
And cut off their ability to send or receive money.
Five major Chinese banks wanted to show how much they agree with the Party’s new crypto
directives.
So they took the initiative.
They said they’re going to “Prohibit the use of their accounts for virtual currency
transactions.
They pledged to promptly put a stop to such transactions, close bank accounts and report
signs of such activities to the authorities.”
“They also called on members of the public to report virtual currency-related transactions
to the banks.”
Yes, your neighbors can turn you in for using bitcoin.
Modern problems require modern cultural revolutions.
And recently, Chinese police arrested over a thousand people for alleged money laundering
with crypto.
Obviously if the Chinese Communist Party says these people were committing crimes, it must
be true.
And as I mentioned, so-called private Chinese companies are joining the crackdown too.
Like China’s version of PayPal, AliPay . That is of course owned by Jack Ma, one of China’s
richest men.
Who disappeared for three months after criticizing Chinese regulators.
Don’t worry, he wasn’t dead.
He reappeared.
After a major crackdown on his tech empire.
And now he’s just lying low, focusing on hobbies.
His hobbies include reading, painting, and staying out of prison by doing whatever the
Communist Party wants.
Like cracking down on crypto.
Alipay said it will monitor and investigate accounts for using crypto, and block or remove
those users.
That’s huge, since Alipay is used by more than one billion people, and 80 million merchants.
Alipay also plans to use algorithms to detect so-called abnormal transactions, flag them,
and restrict certain accounts from receiving money.
I see no potential for abuse there.
Alipay also said merchants using cryptocurrencies will be blacklisted and banished from the
platform.
Now this is hardly the Chinese Communist Party’s first crackdown on crypto.
“Several years ago [China] imposed bans on domestic cryptocurrency exchanges and digital-currency
fundraisings known as initial coin offerings.”
And according to Forbes, “The cryptocurrency market has still not recovered from when China
announced its intensifying regulatory crackdown on cryptocurrencies in mid-May.”
“The market’s total value, now around $1.4 trillion, is around 56% of what it was
just over a month ago.”
In other words, it’s dropped by nearly half.
But as I said, there’s a silver lining to all this.
As the Global Times says, as a result of this ban, “Chinese miners must form alliances
to migrate overseas, to places such as North America and Russia.”
In the long run, getting the majority of Bitcoin mining out of China and out from under the
thumb of the Chinese Communist Party is good.
It means that the Party won’t ever be able to manipulate Bitcoin transactions by controlling
more than half of the mining power.
And that protects everyone who invests in Bitcoin.
And this episode is sponsored by PC-Doctor Toolbox.
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I’m Chris Chappell.
Thanks for watching China Uncensored.