Tighter scrutiny, supervision loom for cryptocurrency market, Chinese state media warns
- Xinhua’s commentary on Sunday reminded consumers not to believe in the ‘myth of wealth creation’ from speculative trading of cryptocurrencies
- That followed a statement from the State Council, China’s cabinet, of a further crackdown on bitcoin mining and trading
“Compared with traditional investment tools, the risks in the virtual currency market are extremely high, as the market is not mature but with strong volatility, high speculation and lack of clear trading supervision rules,” Xinhua said. Its commentary also reminded consumers not to believe in the “myth of wealth creation” from the speculative trading of cryptocurrencies.
That statement, however, still stopped short of an outright ban on cryptocurrency mining. It also did not elaborate on the measures involved or scale of this crackdown.
“How to prevent virtual currency speculation and transaction risks has always been a concern of the regulatory authorities,” Xinhua’s commentary said. “Therefore, tight supervision is a general trend.”
Other vendors, however, expressed concern about the possible collapse of bitcoin and other cryptocurrencies because of China’s latest crackdown.
“Cryptocurrencies will have to be cracked down when it challenges the national currency,” said one netizen in microblogging platform Weibo who gained dozens of likes. “Every economy and currency require regulations.”
Cryptocurrency mining requires massive amounts of electricity to run the large computer server arrays needed to do the complex calculations required for cryptocurrency transactions, as well as for the air conditioning needed to cool these facilities.
China is the world‘s largest cryptocurrency mining location, accounting for 65 per cent of the bitcoin hash rate, a unit of measure for the processing power used by the bitcoin network to verify transactions and mine new tokens of the cryptocurrency, according to estimates by Cambridge Bitcoin Electricity Consumption Index.