The world’s largest digital Bitcoin fell sharply from near-record highs to $60,000 during late morning trade Singapore time on Tuesday. Ether followed suit, sliding as much as 6%. Experts have attributed the fall to China’s crackdown on bitcoin mining.
The National Development and Reform Commission spokeswoman Meng Wei, at a press conference, said Beijing will study the option of levying punitive power prices for companies that are involved in cryptocurrency mining. Over the past couple of months, China has imposed a broad crackdown on the crypto industry in part due to the power consumption and potential environmental fallout of Bitcoin mining.
Meng Wei said mining causes large energy consumption and carbon emission. “It has no active impact to lead industry development or scientific progress. Regulating cryptocurrency mining activities has significant meaning in optimizing our industrial structure, saving energy and cutting emission, achieving carbon emission and neutrality goals.”
Hayden Hughes, chief executive officer, Alpha Impact, a platform that allows investors to copy the strategies of other crypto traders, said there has been a growing concern about regulation and taxation with the signing of the US infrastructure bill. New tax-reporting requirements for digital currencies are part of the $550 billion infrastructure bill that the US President Joe Biden just signed into law.
Under the new US laws, transfer of digital assets above $10,000 in value will be treated like cash. Failure to report the identity of the person or business sending payment for the digital assets would be considered a felony offense; the penalty for non-compliance is up to five years in prison. Since transactions on blockchains often purposely avoid banks and other financial institutions, the new law is both a way for the government to track the transfer of large sums of money and encourage crypto users to involve banks.
It should be noted that bitcoin’s value has more than doubled since June, driven by mainstream adoption of cryptocurrencies and more recently, the launch of futures-based bitcoin exchange-traded funds in the US.