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Bitcoin Falls Below $30,000 Then Recovers As China Crackdown Deepens

The price of Bitcoin on Tuesday dipped below $30,000 for the first time since January before climbing back above that level, as traders weigh a clampdown on trading and mining activity in China.




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Bitcoin was down 0.6% to $32,415, according to CoinDesk. Earlier, it fell as much as 11% to about $28,911, briefly wiping out gains for the year.

China’s central bank on Monday reportedly asked large financial institutions to crack down on cryptocurrency trading.

Many mining operations — or the computerized processes of creating new Bitcoins and developing the blockchain — have been shuttered in that country.

China has been concerned about Bitcoin’s financial risks and its potential climate impact. Observers say most of the world’s Bitcoin mining takes place in China.


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Ups And Downs In Price Of Bitcoin

Among Bitcoin-related stocks, Coinbase (COIN) closed down less than 0.1% in the stock market today. The Grayscale Bitcoin Trust (GBTC) rose 1.1% after falling earlier. Microstrategy (MSTR), which on Monday said it bought an extra roughly 13,005 Bitcoins, fell 5%.

The price of Bitcoin rose last year and through part of this year after drawing interest from major corporations like PayPal (PYPL) and Tesla (MA). Coronavirus stimulus aid also raised concerns about weaker traditional currencies, creating more interest in alternative ones.

Tesla CEO Elon Musk initially allowed customers to buy Tesla vehicles with Bitcoin. The company then suspended those purchases, citing concerns about Bitcoin’s carbon footprint.

Musk this month said Tesla would resume Bitcoin transactions when “there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend.” The price of Bitcoin rose on that news.

But getting the world’s miners to disclose their energy usage and cooperate on the ways they use it could be difficult.

“I think Elon is in a sense trapped by the narrative that Bitcoin is wasteful of energy and contributes to climate change, while also telling a story of clean energy for Tesla, and that this set of recent proclamations is an attempt to unwind himself from the contradiction,” Lex Sokolin, head economist at ConsenSys, said in an email last week.

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