China says cryptocurrency 'is not a real currency' and Bitcoin drops to a 3-month low

An image of a fake Bitcoin with a laptop in the background displaying financial data — (Image credit: Roy Buri, Pixabay)

Bitcoin remains at a three-month low after a rocky 24-hour period, which has so far wiped over 15% off its value and taken many other cryptocurrencies with it. While volatility is something of a trademark for cryptocurrencies today, this sudden drop is seemingly connected to recent statements from China's top banking and financial institutions on whether Bitcoin is a good investment.

Spoiler: China thinks it not.

Financial institutions in China late Tuesday announced a ban on payment companies "from providing services related to cryptocurrency transactions," including trading, clearing, registration, and settlement (via CNBC). This doesn't inhibit an individual from owning a load of bitcoin, but it could make life tricky for Bitcoin investors.

The People's Bank of China also stated virtual currency "is not a real currency" and "should not and cannot be used as currency in the market," according to a post on its official account on the messaging app, WeChat (via the Financial Times), an account the bank set up in 2019 to better communicate with the public.

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Seemingly as a result of these statements, Bitcoin has crashed below $40,000 for the first time since February, and it's taken other popular currencies, such as Ethereum, which is popular with GPU miners, with it.

Ethereum's value is currently sitting around $2,500, despite tracking upwards of $4,000 earlier this month (information from CoinDesk).

China has in the past shown a disdain for cryptocurrencies on the whole, despite a reported 75% of the world's bitcoin mining happening within its borders. The country had previously moved to block bitcoin exchanges in 2017 and further limit exchanges and Initial Coin Offering websites in 2019. You could see today's statement as a reiteration of its previously tough stance on formalising or legitimising cryptocurrencies in the country's financial institutions.

That's Bitcoin crashing in value and Ethereum saying it is looking to ditch GPU mining in the "upcoming months". Will either help you get a graphics card inside your gaming PC? Perhaps, and even more so if cryptocurrency profitability really takes a tumble. However, it's important to remember Bitcoin has long since shifted away from graphics cards as a mode of mining.

For today, however, it looks like the most popular cryptocurrencies may weather the storm, as the fiscal cliff edge that was Bitcoin's pricing has eased off a touch in the early hours.

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Jacob earned his first byline writing for his own tech blog, before graduating into breaking things professionally at PCGamesN. Now he's managing editor of the hardware team at PC Gamer, and you'll usually find him testing the latest components or building a gaming PC.