Authorities see the currencies as a big financial risk, and as a way that people can evade strict national controls on capital, and want to reign in such practices. Beijing is also trying to meet its climate targets to become carbon neutral by , and crypto mining could threaten that. The practice is energy-intensive and consumes a lot of computer power, as it requires machines to solve complex series of algorithms to verify transactions.
China is also struggling with a severe power shortage , which has affected millions of households and factories with power rationing. All rights reserved. Many virtual currency adherents are deeply skeptical of the role governments and central banks play in the financial system. The irony is that as investments in Bitcoin and other assets become more widespread, they will attract more regulatory scrutiny.
Gary Gensler, the new chairman of the Securities and Exchange Commission, has made it clear digital currencies are something his agency will focus on. For example, the billionaire promoted a virtual currency called Dogecoin, which started off as a joke. That sparked a surge in prices, but the currency then crashed after Musk referred to it as a "hustle" when he hosted Saturday Night Live this month. But Musk stunned investors by announcing this month that Tesla would stop accepting payments in Bitcoin because of concerns about the impact on the environment.
In so doing, he brought attention to something that has dogged digital currencies since their inception — that they require a lot of energy to mine. Researchers at the University of Cambridge in the United Kingdom, for example, estimated that mining for Bitcoin consumes more energy annually than the whole of Argentina.
It can go through head-spinning rallies — that are then followed by equally head-spinning crashes, sometimes in a single day. Markets experienced this firsthand on Wednesday. Accessibility links Skip to main content Keyboard shortcuts for audio player. NPR Shop. Bitcoin Is Plunging. Facebook Twitter Flipboard Email. May 20, PM ET. Heard on All Things Considered.