Bitcoin Plunges as China’s Sichuan Province Pulls Plug on Crypto Mining

Bitcoin Plunges as China’s Sichuan Province Pulls Plug on Crypto Mining
A man holds a placard outside the Mana Convention Centre where the cryptocurrency conference Bitcoin 2021 Convention is held, in Miami, Florida, on June 4, 2021. (Photo: Marco Bello, Getty Images)

Bitcoin continued its dramatic plunge to $US32,281 ($41,404) Monday morning, down 17.65% from a week earlier as some of China’s largest bitcoin mining farms were shut down over the weekend. The bitcoin mining facilities of Sichuan Province received an order on Friday to stop doing business by Sunday, according to Chinese state media outlet the Global Times.

The Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau issued an order to all electricity companies in the region on Friday to stop supplying electricity to any known crypto mining organisations, including 26 firms that had already been publicly identified, according to the Global Times.

It seems that some local miners were optimistic that Sichuan’s abundant hydroelectric energy would insulate the region from a cryptocurrency crackdown by authorities, but that optimism was obviously misplaced.

“We had hoped that Sichuan would be an exception during the clampdown as there is an electricity glut there in the rainy season. But Chinese regulators are now taking a uniform approach, which would overhaul and rein in the booming Bitcoin mining industry in China,” Shentu Qingchun, CEO of a Shenzhen crypto company told the Global Times.

Videos on social media sites purported to show miners in Sichuan turning off their mining machines and packing up their businesses.

Miners in China are now looking to sell their equipment overseas, and it appears many have already found buyers. CNBC’s Eunice Yoon tweeted early Monday that a Chinese logistics firm was shipping 3,000 kilograms of crypto mining equipment to an unnamed buyer in Maryland for just $US9.37 ($12) per kilogram.

Bitcoin hasn’t been the only cryptocurrency to experience a price plunge, with ethereum at $US1,930 ($2,475), down 22.25% from a week earlier. The meme-currency Dogecoin is also down dramatically to $US0.22 ($0.29) early Monday morning, plunging 29.74% in the past week.

How much lower will crypto prices go? No one knows for sure, of course. But ponzi schemes can run for a relatively long time before they finally collapse. Pinboard’s Maciej Ceglowski recently appeared on CNBC to explain how the crypto scam works.

The only question is whether bitcoin and the other digital Monopoly money has finally run its course or whether there are a few more pump and dumps left in this old horse. Don’t count the bitcoin diehards out just yet.