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China exacerbates Bitcoin’s losses

China exacerbates Bitcoin's losses

After Elon Musk the Bitcoin has brought a drastic change of mind to crash, developments in China provide for further losses.

Bitcoin’s price is continuing to decline. After the value had risen massively in the first months of 2021, Tesla boss Elon Musk brought the cryptocurrency to a crash with a series of Twitter posts in mid-May. New or extended measures by the Chinese government are now apparently continuing to affect virtual money.

As Heise Online reports, China has continued to prohibit all national banks and payment service providers from trading in Bitcoin and other cryptocurrencies with immediate effect. The responsible banking association and the association for payments and clearing cite the massive price fluctuations of the past few days as the reason.

As a result of the announcement, the already battered Bitcoin price fell by a further ten percent to a value of less than 31,700 euros – the lowest level since February 2021. Whether the further price drop is directly related to China’s measures cannot be clearly understood, but it is Near. A large part of Bitcoin mining takes place in China due to the comparatively low electricity prices there, so the region is definitely important for the virtual means of payment.

Elon Musk’s power consumption is too high

Bitcoin’s huge energy requirement is one of the reasons why Elon Musk recently turned away from cryptocurrency. After his company Tesla had only bought bitcoins worth 1.5 billion US dollars in the spring and made high profits with the resulting price increases , Musk recently expressed environmental concerns.

The electricity consumption for mining the cryptocurrency is too high for the eccentric billionaire and stands in contrast to his ambitions to counteract climate change. He, therefore, withdrew the option, which was only introduced in March, of paying for Tesla cars in Bitcoin – and received heavy criticism for his U-turn.

The ecological balance of Bitcoin and similar currencies such as Ethereum is well known and is considered controversial. Many Bitcoin investors therefore consider Musk’s sudden change of opinion to be hypocritical. Elon Musk’s benevolent remarks about Bitcoin at the time led to massive price increases in the spring, from which Tesla profited greatly.

Elon Musk promotes the Dogecoin

Elon Musk let the current criticism bounce off and followed up with several critical remarks about Bitcoin. He now wants to look for an alternative and more environmentally friendly cryptocurrency. In doing so, he primarily targeted the former fun currency Dogecoin, the price of which has also exploded in recent weeks as a result of numerous Musk tweets.

According to its own information, Musk is currently working with the operators of Dogecoins to improve its efficiency. In a Twitter survey, he also wanted to know from his followers who would vote for the introduction of Dogecoins as a means of payment at Tesla. It remains unclear whether his advocacy for the currency is actually meant seriously or whether he is again misleading his followers. In any case, investors are likely to have become more cautious in view of its Bitcoin U-turn.

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About the author

Linda Kelly

Linda Kelly

She has contributed to Perseus Promos, Hazlitt, Rolling Stone, New Republic, Atlantic, GQ, Racked, VICE and The New Inquiry.

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