China State TV Reports the Crypto Misery in South Korea
Cryptocurrency companies and investors in South Korea, a major crypto and blockchain hub, are taking a beating as the crypto mania comes to a halt in 2018 and the market continues to bleed with no end in sight, China’s Financial Channel (CCTV-2) reported January 1.
According to the CCTV-2 program, in early 2018, the cost for mining one ether, the native cryptocurrency of Ethereum, was $214 in South Korea. The nationwide crypto frenzy then drove the digital coin’s price to an all-time high at 2.35 million Korean won ( about $2095) in the country. When Ethereum reached its record high in January, 2018, a South Korea-based mining farm bought nearly 1,000 Ethereum mining gigs in order to make quick money. But soon the crypto market started to crash, and in last November, the mining farm was forced to shut down mining machines as Ether’s price fell below its cost of mining, and investors in crypto and blockchain turned their attention elsewhere.
The mining farm’s operator stated that the majority of miners in the country could not afford their electricity bills as the digital currency’s price continued to hit a fresh low. “To my knowledge, 70 to 80 percent of mining farms have ceased operation, and many even declared bankruptcy.”The operator said.
As of December 31, major cryptos like Bitcoin, Ether, and Ripple’s XRP lost over 80 percent of their value from all-time highs. Data from the Bank of Korea, the country’s central bank showed Korean won made up only 5.8% of the market share of crypto-fiat tradings, less than half of the trading volume of cryptos into Korean Won over the same time period in 2017. Besides, the “Kimchi premium”—or the extra that Koreans paid for cryptocurrencies versus global price benchmarks—dropped to 1% from 40% at the beginning of 2018.
Speaking of price predictions, Lee Jun-haeng, CEO of Streami, cryptocurrency exchange Gopax operator told the program the market will continue to demonstrate stability in a low price range in the first half of 2019, and some virtual currencies will likely drop further.
Although the South Korean government has stepped in to curb the excessive speculation in cryptocurrency space, including a ban on anonymous crypto trading and a restriction on crypto investment by minors, the lack of a comprehensive regulatory framework gives criminals some space to attack crypto exchanges and to fake bitcoin trading volumes.
Kim Hyoung-joong, Director of the Korea Blockchain Enterprise Promotion Association (KBEPA) urged the government to launch comprehensive regulatory measures, and the South Korean National Assembly to create a legal definition of virtual currency and introduce special bills for the crypto industry.
Despite China’s clampdown on cryptocurrency tradings, Chinese investors still have access to the crypto market, thanks to the popularity of many offshore operators. CCTV-2, which is under the supervision of the State Council of the People’s Republic of China, intends to inform Chinese about the current crypto misery and to warn them away from the volatile and unregulated market.