China is reshaping the cryptocurrency landscape

Beijing – Anatolia: Until last May, China had the largest part of “virtual currencies” operations and data centers, especially the “Bitcoin” currency, and an attractive environment for cryptocurrency mining (issuance) which threatened its electric power balance.
Also, China was responsible for producing about 75 percent of bitcoin globally, according to the Cambridge Center for Alternative Finance.
The amount of electrical energy used in cryptocurrency mining raises concerns in China, as the energy used in the process of producing these coins is equivalent to the needs of 5 million homes annually for 500 years.
And China, whose electricity prices are the lowest compared to the global average, is worried that it will turn into a large and terrifying focus of pollution due to the mining of digital currencies.
Therefore, China launched a campaign to control the virtual currency chaos taking place on its territory, as it banned financial institutions and payment companies from providing cryptocurrency services. The ban, which began last May, also came days after Beijing launched the “Xia” digital currency backed by the Chinese Central Bank, which appeared to ban the trading of virtual currencies to promote the rising local currency.
On June 22, the Chinese Central Bank said in a statement that it had summoned several major banks and payment companies, and asked them to tighten their measures regarding digital currencies used in commercial transactions.
After China’s decision, the price of virtual currencies fell, and their market value fell from an average of 2.53 trillion dollars, to 1.7 trillion dollars.
Also, the most popular virtual currency, “Bitcoin” tumbled to an average of 35-39 thousand dollars per unit, compared to its peak last April of 63 thousand dollars.
Since China’s decision, “Bitcoin”, for example, has not managed to reach its peak again, and has not even exceeded the $42,000 barrier, which shows the weight of China in this market.
Until early trading on Tuesday, “Bitcoin” was trading at an average of 36.9 thousand dollars per unit, while it was recorded at the beginning of trading this week at 32 thousand dollars.
China’s campaign against cryptocurrencies was not only aimed at reducing energy waste, but the more important motivator of China’s decisions was to provide the digital yuan with the chances of success.
According to data issued by the People’s Central Bank of China in mid-July, the transactions carried out using the digital (experimental) yuan amounted to 34.5 billion yuan (about 5.3 billion dollars) until the end of June.
The bank has opened wallets for about 20.8 million people across China to deposit digital currency, with more than 70.7 million transactions conducted. “The digital yuan is not a substitute for the monetary yuan and is not analogous to cryptocurrencies, because the official digital yuan is issued by the Chinese Central Bank as a complementary payment method, not an alternative to the monetary currency,” Xinhua news agency quoted the central bank’s deputy governor, Fao Yifei, as saying.
Despite recent reports that China’s share of the “Bitcoin” mining market declined to only 46 percent of the global issuance last April, compared to 75 percent in September 2019, the Chinese government seems to be in control, and it is determining the direction of Cryptocurrency process.
The US share of the bitcoin mining market rose to 16.8 percent in April, from 4.1 percent in September 2019, and Kazakhstan’s share rose to 8.2 percent, while Russia came fourth and Iran fifth, during the same period.