China crackdown leads to another Bitcoin dip

Crackdown on Sichuan hydropower mining operations suggests higher motivation of China than environmental concerns

Several cryptocurrencies, most notably Ethereum and Bitcoin, have undergone a major dip once again over the weekend, as China conducted the most controversial crypto crackdown yet. The country had formerly produced more than half the world’s Bitcoin hash rate, which is now quickly declining.

Bitcoin had recovered quite well from several pushbacks, including detrimental Musk tweets and previous crackdowns in China, Iran and several African economies, leaping onto $40.000 last week. Monday, June 21, the price is barely holding $33.000, with Ethereum undergoing similar hardships, now resting at $2.000.

The first mining crackdowns conducted in China, were backed by the ambitions to become carbon-neutral by 2040, and took place in Xinjang, Inner Mongolia and Yunnan.

However, this time it’s different. Sichuan attracted crypto miners with its rich hydropower resources and had seen a spike during the rainy summer season. A factor that made Sichuan the second-largest mining field in China. Nonetheless, the Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau issued a joint statement on Friday, demanding all hydro plant operators to immediately stop fuelling crypto miners. 26 cryptocurrency mining operations were addressed to terminate immediately. New projects are banned.

This proves what many had believed before, that the Chinese ambitions to counter the country’s DeFi industry is not primarily concerned with environmental damage, but much more with currency competition. The Digital Yuan, China’s CBDC project, is in a highly advanced phase, and supposedly aims to replace the Dollar as the number one global currency. It seems plausible that China is seeking to accelerate and secure the CBDC’s power by getting rid of DeFi competitors.