Bitcoin prices fell almost 10% on Monday thanks to China’s recent crackdown on cryptocurrency mining, highlighting volatility in the virtual currency market.
China’s central bank on Monday said it had asked banks and payment institutions to crack down harder on cryptocurrency trading, Reuters reported.
China’s political cabinet, the State Council, said last month that it would aggressively push to squash cryptocurrency mining and trading in order to reduce and control financial risks in the Chinese market.
Many cryptocurrencies, including Bitcoin, must be digitally “mined” by high-powered computers that solve complex math problems in order to produce new bitcoins, a process that is time and energy intensive.
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The Chinese government authorities in the southern province of Sichuan on Friday required all bitcoin mining projects in the region to close.
Crypto mining has been a lucrative business with large demand in China, accounting for more than half of global bitcoin production so far.
Bitcoin value has fallen 20% in the last six days and hit its lowest point in 12 days on Monday, at $32,094.
The world’s most traded cryptocurrency has faced immense instability in the past few months, after its April peak of almost $65,000.
In the United States, the IRS commissioner earlier this month asked Congress for new authority and resources in order to regulate cryptocurrencies for better tax collection and to avoid frauds and scams.
Most cryptocurrency transactions are pseudonymous because they obscure the identity of those trading coins, but the blockchain technology that enables cryptocurrencies uses a public ledger that allows for less privacy than some may realize.
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Cryptocurrencies make up a small share of business transactions, the Treasury Department has noted, but a huge increase in cryptocurrency investing in the past year suggests digital coin use could become more frequent.
