0709 GMT January 16, 2022
The cryptocurrency sank below the key $30,000 threshold Tuesday, at one point briefly erasing all its 2021 gains. It later recovered to turn positive for the day, CNBC reported.
On Wednesday, bitcoin climbed back above the $34,000 mark to trade as high as $34,367 in early morning trade, according to Coin Metrics data. It last changed hands at $33,969, up nearly 8% in the last 24 hours.
Smaller rivals also surged, with ether rising 6% to $2,014 and XRP up 9% at a price of 64 cents. The reason for the moves higher wasn’t clear, but cryptocurrencies are known for their volatility.
Bitcoin had a solid start to the year, rallying to an all-time high of almost $65,000 ahead of crypto exchange Coinbase’s blockbuster debut and as institutional investors appeared to be warming to it.
But the world’s biggest digital coin has been on a rollercoaster ride since, almost halving in value amid a slew of negative news.
In China, authorities have been clamping down on bitcoin mining, the power-intensive process for validating transactions and generating new bitcoins. Over the weekend, China’s crackdown on crypto mining extended to the hydropower-rich Sichuan province.
Then, the People’s Bank of China on Monday said it had urged financial institutions including Alipay and major banks not to provide services related to cryptocurrency activities.
Investors have also become more concerned about bitcoin’s environmental impact, after Tesla CEO Elon Musk decided to stop accepting bitcoin as a method of payment for his company’s vehicles.
At the time, Musk said he was worried about bitcoin’s huge energy consumption and the “rapidly increasing use of fossil fuels” in mining the digital asset.
Critics of the cryptocurrency have long been wary about its impact on the environment. That could threaten the adoption of bitcoin by institutional investors, which are under growing pressure to invest in cleaner, more ethical assets.
Meanwhile, there have also been concerns about tether, a so-called stablecoin whose price is meant to be pegged to the U.S. dollar.
Tether is now the world’s third-largest digital currency with a market value of more than $60 billion. But some investors are worried tether’s issuer doesn’t have enough dollar reserves to justify its dollar peg.
Last month, the company behind tether broke down the reserves for its stablecoin, revealing that around 76% was backed by cash and cash equivalents — but just under 4% of that was actual cash, while about 65% was commercial paper, a form of short-term debt.
It comes after the New York attorney general’s office reached a settlement with Tether and Bitfinex, an affiliated digital currency exchange. The state’s top law enforcement official had accused the firms of moving hundreds of millions of dollars to cover up the loss of $850 million in commingled client and corporate funds.
Illegal farm seizure in Iran
On Tuesday, Iranian police seized 7,000 computer miners at an illegal cryptocurrency farm, their largest haul to date of the energy-guzzling machines.
In late May, Iran banned the mining of cryptocurrencies such as bitcoin for nearly four months as part of efforts to reduce the incidence of power blackouts blamed by officials on surging electricity demand during the hot and dry summer, Reuters reported.
Tehran Police Chief General Hossein Rahimi said the 7,000 computer miners were seized in an abandoned factory in the west of the capital.
Bitcoin and other cryptocurrencies are created through a process known as mining, where powerful computers compete with each other to solve complex mathematical problems. The process is highly energy-intensive, often relying on electricity generated by fossil fuels, which are abundant in Iran.
Iran has accepted crypto mining in recent years, offering cheap power and requiring miners to sell their bitcoins to the Central Bank of Iran (CBI). Tehran allows cryptocurrencies mined in Iran to be used to pay for imports of authorised goods.