Cracks Down on Crypto Currencies by China and Falling of Bitcoin

The worth of Bitcoin has fallow down below $40,000 for the first time in the past three months, which was severely affected after China has been able to impose fresh limitations on the usage of crypto-currencies. On Tuesday, Beijing has announced to ban on payment firms and financial institutions from giving services that are in any way related to the transactions of cryptocurrencies.

The country has also given a warning in advance to all investors against speculative trading of any cryptocurrency. This news follows the reduction in the value of Bitcoin of more than 10% in the previous week after the electric car-making firm Tesla stated that they would no longer be accepting cryptocurrency as payment for their vehicles.

On Monday, Bitcoin was down around 13%; meanwhile, other cryptocurrencies like Etheruem and Dogecoin have lost their worth of more than 18%.

Illegitimacy of cryptocurrency in China

Since the year 2019, the trading of cryptocurrencies had been illegal throughout China in order to help limit money laundering to and from the country. Although, people were still able to access and trade in cryptocurrencies like Bitcoin while being online, which has raised various concerns by the government of the country.

The three state-backed organization on Tuesday, including the National Internet Finance Association of China, the Payment, and Clearing Association of China and the China Banking Association has recently issued a warning on their social media presence for the users.

They stated that the consumers would not be provided with any protection rights if they were to suffer from any unexpected losses from the investments made by them during the transactions of cryptocurrencies, including Bitcoin, and they would be liable to all of the damages on their personal assets.

They also added that the recent sudden changes in the prices of cryptocurrencies available have the tendency to seriously violate the safety of the assets of people and are also causing disruption in the normal financial and economic order of the country.

According to Neil Wilson, China for the past several years have been putting pressure on the crypto space, but recently it has become more intensified, and it is expected that soon other countries from around the world would soon be following in the steps of China as the Central Bank is currently trying to launch their own form of digital currency in the upcoming future.

Up till now, the regulatory authorities of the west are relaxed regarding Bitcoin, but it soon might change after some time in the future.

Tesla’s rejection of Bitcoin

In the month of March this year, Elon Musk, the founder of electric carmaker Tesla, has publicly announced unexpectedly that they would be allowing the customers to choose Bitcoin as their mode of payment while purchasing their innovative vehicles.

Due to this, the firm was able to make a massive profit of more than $900 million after they were able to buy $1.5 billion worth of Bitcoin in the early week of February, which also leads to its rapid rise in worth.

But in the past week, Elon Musk took a U-turn and has completely suspended the purchasing of their vehicles by giving Bitcoins in return due to various concerns regarding its damage to the environment.

Elon Musk’s fears are centered around the mining of Bitcoins, which is an energy-intensive procedure by which the cryptocurrency is being generated, by the usage of high-powered computers that solely relies on the generation of energy source from fossil fuels, mostly coal, which ultimately is highly damaging to our surrounding environment.

Mr. Musk has written that his firm is concerned regarding the rapid surge in consumption of fossil fuel which is issued in the mining process along with transactions of Bitcoin, especially coal, which is one of the worst emitting substances among all fossil fuels that are used for generation of electricity.

The idea of cryptocurrency like Bitcoin is good, although it cannot come at a much greater cost to our surrounding’s rapidly declining state of the environment.

The CEO of Tesla has also confirmed that they do not intend to sell any of the Bitcoins which they had previously acquired and are intending to reinstate the transactions of Bitcoins once the Bitcoin mining process is shifted to a more sustainable source of energy.

Although all trading of cryptocurrency had been banned by China, it is reported that more than 75% of the global mining and trading of Bitcoin is usually done in China.

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