Marathon Digital and other crypto-linked stocks drop after China declares cryptocurrency transactions illegal

Getty Images/ Bitcoin Dan Kitwood/
After China made crypto-related transactions illegal, Bitcoin miners Marathon Digital & Riot Blockchain were forced to close their doors Friday

China stated that virtual currencies do not have the same legal status as fiat currency.

Bit Digital and Coinbase were two other crypto-linked stocks which lost ground.

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After China declared that all crypto-related transactions were illegal, shares of bitcoin miners and other stocks linked to the cryptocurrency space fell Friday. The country's ongoing crackdown on digital assets has also contributed to a drop in bitcoin's price.

According to a translation of its statement, the People's Bank of China stated that Bitcoin and ether are not legal and should not be and cannot be used in the market. It stated that virtual currencies are not legal as fiat currency, because they are issued by non-monetary authorities using encryption technology.

The PBOC stated that buying and selling virtual currencies in central counterparties and offering pricing services are illegal. The PBOC also stated that online virtual currency exchanges offering services to Chinese residents are illegal.

US shares of Marathon Digital, a bitcoin miner worth around $3.6 billion, dropped 7% premarket and fell as high as 8.4% when they reached $34.53. Bit Digital and Riot Blockchain, both bitcoin miners, fell 7% and 7.9% respectively.

Coinbase shares, the US's largest cryptocurrency exchange, fell 3.7% while Robinhood lost 2.7%. MicroStrategy lost 5.6%, which is the software company that makes large bitcoin purchases.

Beijing has been tightening its grip on cryptocurrency operators, which is weighing down on the prices of digital coins. China had previously shut down bitcoin mining operations in China, citing environmental concerns. There are also concerns that digital assets could be used for financial crimes.

Bitcoin, the most traded cryptocurrency in the world, fell 7.9% to $41,353 on Friday. Similarly, ether, the token for the ethereum blockchain's ethereum blockchain, dropped 10% to $2,823.