The cryptocurrency market is facing a tough new situation following statements by the governments of China and Iran against Bitcoin and cryptocurrency mining activities within their territories.
China reveals its plans to crack down on Bitcoin and cryptocurrency mining in the country, citing its environmental goals as the reason for increasing oversight and regulation of this activity. Iran, for its part, wants to fight against illegal mining of bitcoins and other digital assets that, in its opinion, are affecting the electricity supply in its communities.
For these reasons, both countries announced that they will take strong measures against cryptocurrency mining activity.
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China against Bitcoin mining and trading
At the 51st meeting of the Financial Stability and Development Committee of the State Council of China, Liu He, Vice Premier and member of the Political Bureau of the CPC Central Committee, said that China's new measures against Bitcoin mining will help the Asian country protect itself from the financial risks associated with digital assets.
Trading activities involving Bitcoin and other cryptocurrencies will also be regulated, Liu He explained, to minimize volatility risks.
As indicated by the releaseWith these strong measures, one of the objectives pursued by the Financial Stability and Development Committee of the State Council is to resolutely prevent and control financial risks.
China believes that strengthening supervision of financial activities and cracking down on Bitcoin mining and trading activity will substantially reduce illegal activities and risks, and help ensure the stability of the stock, bond and currency markets.
Environmental objectives
The vice premier also explained that increased oversight of Bitcoin mining activity, which is dominated by China, will ensure compliance with its environmental goals, which seek to reduce carbon emissions by 18% by 2025.
With more than 60% of the Bitcoin network's mining power concentrated in China, the nation says it is concerned about the effects that carbon emissions from this activity could have on the planet.
The Bitcoin Evangelist Anthony Pompliano, analysts of Galaxy Digital, and other cryptocurrency industry experts, argue that 75% of Bitcoin miners are using alternative energy sources, although a report de Nature Communications. He also points out that some of the mining equipment operating in the country is obsolete and, therefore, its energy consumption is high.
This is apparently what the Chinese government fears, that carbon emissions produced by this part of cryptocurrency miners will become a problem for the country in the future.
Bitcoin and the digital yuan: a war of interests
On the other hand, we must not forget that China is about to launch its own digital currency. CBDCCalled DCEP or digital yuan. This currency, based on blockchain technology like Bitcoin, will allow the country to create a new economic system for its nation and the world.
All the decisions China is making against Bitcoin and cryptocurrencies right now are happening at the same time as it is promoting the use of its digital yuan, integrating it more and more into its society. Recently, China's central bank implemented the DCEP in the payment application Alipay, which has more than 1.500 billion users worldwide. China is thus arguably creating a favorable environment for its digital currency, while restricting the innovation that Bitcoin offers as a decentralized and global currency.
Iran, a fight against illegal mining
The Islamic country is also cracking down on cryptocurrency mining. According to a report BloombergIran's Intelligence Ministry is now involved in government investigations to identify potential mining farms that are not properly registered and operating on domestic power supplies.
The country's intelligence officials are identifying all those who are mining bitcoins and other cryptoassets without a license.
According to the electric company Tavanir, the high demand for cryptocurrencies in Iran is having a major impact on the electricity supply, which, together with poor hydroelectric generation, is causing shortages and power outages in several regions of the country, affecting the population.
This company, together with the government, has closed thousands of crypto mining farms since last year, for allegedly operating without a license and using high levels of energy from the domestic supply network. Let us remember that in Iran, Bitcoin mining is not prohibited, but on the contrary, the government gave it legal character to this activity and established regulations so that mining farms register with the Central Bank, and operate according to the amount of subsidized energy and the mining power they have within the blockchain networks.
The legalization of cryptocurrency mining in Iran helps the country to use all the energy surplus that it cannot export due to the blockades established by the United States government in political and economic matters. In addition, a report de Elliptic A recently published report indicates that Iran may be responsible for around 4,5% of Bitcoin mining, which generates profits of around $1.000 billion per year.
Miners in the country are required to sell the bitcoins they have mined, within the authorized limits, to the Central Bank of Iran, since trading in cryptocurrencies and digital assets is prohibited within the territory.
Crypto markets crash and recover
China's new regulations have caused a new crash in the crypto markets. On Friday, the price of Bitcoin fell by more than 10% again, following Liu He's statements against crypto mining and trading activity. However, at the time of writing this note, the price of bitcoin has recovered by more than 13% and is trading at a value close to $39.000.
Bitcoin (BTC) is cryptocurrency leader of the digital industry and the first one created in the world. Its current market capitalization is 714.180 billion dollars, and it maintains a 45% dominance over digital markets.
This cryptocurrency was designed in 2009 as a alternative and decentralized financial system, capable of returning the freedom and control of money to its own users, who do not need intermediaries to manage their money and carry out their commercial operations.
Because of the way it works and its promise to revolutionize the current corrupt and worn-out economic system, Bitcoin has been demonized by the media and large corporations for years. However, with more than 100 million active users worldwide and a growing demand from investors who want bitcoins, institutional adoption of this cryptocurrency has begun to awaken.
Financial analysts and entrepreneurs such as David Rubenstein y Cathi Wood claim that it is not the end of Bitcoin, and that the cryptocurrency is here to stay. Even the world's largest banks, such as JPMorgan, Goldman Sachs, US Bank, and several others, are approaching Bitcoin, to help their clients and users enter the world of cryptocurrencies.
Other regions of the world, such as the Canton of Zug and Dubai Free Zone are allowing the use of bitcoin in commercial transactions.
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