China intensifies crackdown on cryptocurrencies despite being largest network of bitcoin

Despite being the world's largest mining work for bitcoin, China has intensified a crackdown on cryptocurrencies by banning institutions and companies from providing cryptocurrency services to customers.

Three financial self-regulatory bodies had issued a joint notice on Tuesday banning financial institutions and payment companies from directly or indirectly providing cryptocurrency services to customers, including accepting the currency as payment, Nikkei Asia reported citing local media.

This came after the Inner Mongolian Autonomous Region, which recently started a campaign to stamp out cryptocurrency mining in a bid to cut carbon emissions, had announced on the same day that it had set up a platform for residents to report 'illegal projects'.

China has taken a negative view of cryptocurrencies for a long time due to concerns over potential risks to the domestic financial system. In 2014, financial regulators banned financial and payments institutions from conducting bitcoin-related business.

However, China dominates the global bitcoin mining network, which consumed more electricity in 2019 on an annualised basis than Argentina, according to the Center for Alternative Finance (CAF) at the University of Cambridge, reports Nikkei Asia.

According to another study last month, China's energy consumption from bitcoin mining in 2024 will exceed the total energy consumption in countries like Italy and carbon emissions from the communist country will top the annual greenhouse gas emissions of Spain and the Netherlands.

From September 2019 to April 2020, China's consumption of computational from mining bitcoin accounted for an estimated 65 per cent of the total global bitcoin hash rate, according to data compiled by the CAF.

Concerns have grown globally about the energy intensity of cryptocurrency mining. After publicly supporting bitcoin and saying it would be accepted as payment for car purchases, Elon Musk, the founder of electric vehicle maker Tesla Inc, reversed course last week, Nikkei Asia reported.

Musk tweeted that Tesla had suspended purchases using the digital currency due to concerns about the use of fossil fuels for bitcoin mining and transactions.

Meanwhile, the news of the crackdown by China's financial regulators on Tuesday sent cryptocurrency prices tumbling, from USD 63,000 in mid-April to USD 39,000 on Wednesday.

( With inputs from ANI )