Bitcoin mining is quietly staging a comeback in China despite being banned four years ago, as individual and corporate miners exploit cheap electricity and a data center boom in some energy-rich provinces, according to miners and industry data.
China had been the world's biggest crypto mining country until Beijing banned all cryptocurrency trading and mining in 2021, citing threats to the country's financial stability and energy conservation, according to Reuters.
After having seen its global bitcoin mining market share slump to zero as a result of the ban, China crept back to third place with a 14% share at the end of October, according to Hashrate Index, which tracks bitcoin mining activities.
The resurgence in bitcoin mining, which has also been corroborated by rig maker Canaan Inc’s fast-rebounding sales in China, could act as a demand and price support for the world’s largest cryptocurrency.
Wang, a private miner in Xinjiang, said he started mining late last year in the energy-abundant province.
“A lot of energy cannot be transmitted out of Xinjiang, so you consume it in the form of crypto mining,” Wang said, asking to be identified by just his last name. “New mining projects are under construction. What I can say is that people mine where electricity is cheap.”
Mining Resurgence
Beijing's crackdown on the sector in 2021 led to miners shutting down local operations and fleeing to overseas markets such as North America and Central Asia.
The rebound in bitcoin mining coincides with the digital asset hitting record highs in October on the back of US President Donald Trump’s pro-crypto policies, and growing distrust toward the dollar, making crypto mining more rewarding.
The cryptocurrency, however, is down roughly a third from its October peak as global risk appetite wanes.
“Chinese policy flexibility emerges when economic incentives are strong in specific regions,” said Patrick Gruhn, CEO of Perpetuals.com, a provider of crypto market infrastructure. “The resurgence of mining activity in China is one of the most important signals the market has seen in years.”
China has not officially relaxed bitcoin mining curbs, but “even hints of China's policy easing could act as a tailwind for bitcoin's narrative as a global, state-resilient asset,” he said, pointing to industry data signaling renewed activity.
Bitcoin mining - the energy-intensive process of using specialized computers to solve complex puzzles to win bitcoins - is especially active in power-abundant hinterlands such as Xinjiang, according to miners and rig makers.
Sichuan-based Duke Huang, who quit bitcoin mining a few years ago due to the Chinese regulatory ban, said some of his friends have come back to the business recently. “It's a sensitive area ... But people who get cheap electricity are still mining.”
Besides higher bitcoin prices, a glut of electricity and computing power following over-investment in data centers by some cash-strapped Chinese local governments fueled the rebound, said a source at a bitcoin mining rig maker, who did not want to be identified due to the sensitivity involved.
Crypto Policy
The trend is also captured by sales data from mining rig makers.
Canaan, the world's second-biggest bitcoin mining machine maker, generated 30.3% of its global revenues in China last year, compared with 2.8% in 2022 in the aftermath of the crackdown, according to company filings.
China's contribution to Canaan's sales jumped further to more than 50% during the second quarter this year, according to a source with direct knowledge, who declined to be named as he is not authorized to speak to the media.
Canaan, which did not confirm the second-quarter sales breakdown, attributed its growing sales in China to this year’s US tariff uncertainty that disrupted US sales, rising bitcoin prices that make mining more profitable, and a subtle shift in China’s digital asset posture.
In an emailed statement, the Singapore-based company said its activities remain fully compliant with Chinese regulations but refused to comment on mining policies in China.
“In China, the R&D, manufacturing, and sale of mining machines are permitted,” Canaan said.
The pickup in bitcoin mining in China comes amid signs that Beijing has softened its attitude toward digital coins. These were once seen as a challenge to China's fiat currencies and abetting capital flight.
Hong Kong's stablecoin bill, for example, took effect in August, enabling the Chinese city to compete with the US in fostering a regulated market for fiat-currency-backed cryptocurrencies.
China was also considering allowing the use of yuan-backed stablecoins to boost the wider adoption of its currency globally and catch up with a US push on stablecoins, Reuters reported in August, citing sources familiar with the matter.
“Bitcoin mining is still officially banned in China. However, there continues to be significant capacity operating,” said Julio Moreno, head of research at CryptoQuant, a blockchain data & analytics firm.
CryptoQuant estimated that 15%-20% of global bitcoin mining capacity currently operates in China.
Liu Honglin, founder of Man Kun Law Firm, said it is hard to wipe out a profitable business.
“I personally think government policies against mining will be gradually loosened, because you simply cannot stop such activities completely.”
