China announced last week that the country's financial institutions would no longer be able to sell Bitcoin services and that mining would be banned. Many in the Bitcoin community have reacted skeptically to the news, noting that China has previously "banned" its companies from using Bitcoin to little effect, and that it is also theoretically impossible to completely ban Bitcoin for personal use.
However, it is clear that this new regulatory move is having an effect on the Bitcoin ecosystem as local miners and exchanges are limiting or shutting down activities.
Reactions to the ban
Prices plummeted on Sunday as miners halted operations in the face of increasing scrutiny by the authorities.
From a low of $ 31.107 on Sunday, Bitcoin climbed to $ 35.970, but increasing market volatility has made it difficult to make further progress and remains 45% below last month's record high of $ 64.895.
The ban returned the world's most valuable cryptocurrency to where it was in February, shortly before Tesla (tesla shares - ticker TSLA) reported a $ 1,5 billion acquisition of bitcoin and announced its decision to accept bitcoin as payment for vehicles, which has since also been withdrawn.
"On Sunday, [bitcoin] prices plummeted as 'miners', who mint cryptocurrencies by verifying transactions, halted Chinese operations in the face of increased scrutiny from the authorities," Reuters reported. "The trigger for the initial cryptocurrency sell-off seemed to come from the harsh language of Chinese regulators."
The bitcoin trading scene also appears to be undergoing a dramatic transformation. Those operating in Hong Kong, at a minimum, will need to obtain a license from the city's market regulators and will be limited to providing services to professional investors only.
"Dozens of cryptocurrency exchanges operate in Hong Kong, including some of the largest in the world," according to a Reuters report. "Under Hong Kong law, an individual must have a portfolio of HK $ 8 million ($ 1,03 million) to be considered a professional investor."
Elon Musk and Michael Saylor push for the Bitcoin Mining Council
Tesla Technoking Elon Musk announced on Twitter on Monday that he had talked to bitcoin miners. Here's what he said:
“I talked to North American bitcoin miners. They have pledged to publish current renewable energy use and planned to ask miners around the world to do so. Potentially promising ".
Saylor went on to say that the meeting included executives from Argo Blockchain, Blockcap, Core Scientific, Galaxy Digital, Hive Blockchain, Hut 8 Mining, Marathon, and Riot Blockchain.
According to Microstrategy's CEO, executives attending the meeting "decided to create an organization to standardize energy reporting, pursue industry ESG goals and educate and grow the market."
Although Bitcoin does not need any government permission to operate, it appears that recent Chinese legislation could alter the Bitcoin environment, at least in the short term.