Bitcoin: The cryptocurrency continues to decline after new Chinese restrictions on dealing with it

                

Cryptocurrency bitcoin plunged below $34,000 for the first time in three months on Wednesday, after China imposed new restrictions on cryptocurrencies and Tesla stopped selling cars using it.

Beijing has banned banks and money transfer companies from providing services related to cryptocurrency transactions.

On Tuesday, China also warned investors not to speculate on cryptocurrencies.

This comes after bitcoin fell more than 10 percent last week after the US company Tesla said it would no longer accept the currency.

But Bitcoin regained some of its gains, on Wednesday afternoon, although it continued to decline by 10.4 percent to settle at 38 thousand and 131 dollars.

Meanwhile, other cryptocurrencies such as Ether, which serves as fuel for the Ethereum network, lost 22 percent, and Dogecoin lost about 24 percent.

Tesla shares also fell more than 3 percent on Wall Street, possibly due to its decision to deal with digital currency.

However, Tesla, owned by billionaire Elon Musk, still owns about $1.5 billion in cryptocurrency.

Beijing is taking strict measures

Cryptocurrency trading has been illegal in China since 2019 to curb money laundering crimes. However, currencies such as bitcoin can be traded online, which worries Beijing.

Three state-backed organizations, including the National Internet Finance Association of China and the China Banking Association, issued a warning on social media on Tuesday against dealing with them.

Chinese organizations have warned that consumers will not enjoy any protection if they incur any losses from cryptocurrency investment transactions.

and explained that recent extreme fluctuations in cryptocurrency prices "seriously violate the integrity of clients' financial assets" and disrupt "the normal economic and financial system."

"China has been putting pressure on the crypto sector for some time, but what happened recently represents an escalation that other countries may follow now," said Neil Wilson of Markets.com.

He added that Western regulators have so far been comfortable with bitcoin, "but that may change soon."

Elon Musk has stopped dealing with Bitcoin to protect the environment because computers consume a lot of energy to create it

Tesla bend

Back in March, Elon Musk unexpectedly announced that the electric car maker would allow customers to buy cars with Bitcoin.

But last week, there was a serious turn and Mask stopped car purchases with bitcoin due to environmental concerns.

Tesla achieves record profits thanks to its bitcoin sales

His concerns center on bitcoin mining, which means heavy use of power running high-powered computers. They often rely on electricity generated by fossil fuels.

“We are concerned about the rapid increase in the use of fossil fuels for bitcoin mining and transactions, especially coal, which causes the worst carbon emissions of any fuel,” Musk wrote.

"Cryptocurrency is a good idea...but that can't come at a huge cost to the environment," Musk added.

He said the electric car maker had no intention of selling any of its bitcoin and intends to reintroduce the cryptocurrency once mining switches to more sustainable energy sources.

Although the cryptocurrency cannot be traded in China, more than 75 percent of bitcoin mining worldwide takes place in China.