Beijing's moves to rein in bitcoin aren't deterring China's new crypto-currency kings

Some of the most powerful players in the world of bitcoin say recent moves by Chinese regulators targeting use of the virtual currency will not stall its long-term rise.

Through sheer weight of numbers, Chinese investors have seized virtual control of the highly valuable crypto-currency in recent years, with huge computer 'mining' farms in remote areas playing a crucial role.

At the start of this year, more than 90 per cent of daily trade for bitcoin was being made in Chinese yuan.

But that has fallen, as China's Central Bank, the PBOC, started taking a series of regulatory measures to rein in the use of bitcoin.

"The PBOC can potentially have very strong control over the price of bitcoin, at least in the short term, because it can effectively cut the money flow involved in bitcoin trading," said Jihan Wu, one of the most prominent figures in the global bitcoin community.

Mr Wu operates Bitmain — a Beijing-based company that is the leading manufacturer of the specialist computers used to generate new bitcoins on the network.

His company also administers Antpool, one of the biggest bitcoin mining collectives, along with several computer 'mines' in China's remote western areas where electricity is cheaper.

"But I don't think the Chinese Government will do very aggressive regulation over bitcoin.

"I just think they want to control the risk for those investors who don't have enough knowledge about bitcoin."

Chinese moves impacting highly volatile currency

In February, Chinese regulators forced two major Chinese bitcoin exchanges to temporarily halt withdrawals while they upgraded anti money-laundering measures.

While that wiped almost a third off bitcoin's value, it has rebounded to hit new highs — peaking in March at $US1,290, before taking a hit when a US-based plan for a publicly listed bitcoin electronic trading fund was knocked back by regulators.

Since then, the currency has continued its upward rise, due to an explosion of direct buying and selling between Chinese investors off the exchanges, known as 'over the counter' trade.

"In the longer term, I don't think the regulations are a bad thing", said Zhao Dong, another Beijing-based investor who heads up a company called Galaxy Dragonfly Investments.

Mr Zhao previously invested in bitcoin mines, and has ridden the highs and lows of the currency's volatility, at one point losing close to $4 million.

But he still spends all day trading the currency on behalf of clients both in China and overseas.

"In future, if there's a global online currency that's adopted widely enough, then no government will be able to control it", he said.

"For bitcoin, the possibility of this is huge, and even if it's not bitcoin, a similar currency would also surely develop.

"This is why I devote myself to this career."