Despite an official nationwide ban implemented four years ago, Bitcoin mining operations are experiencing a quiet but significant resurgence across China. Individual miners and corporate operators are capitalizing on cheap electricity and a booming data center industry in energy-rich provinces, according to a Reuters investigation that cites industry participants and data.
The Rise, Fall, and Stealthy Return of Chinese Mining
China previously dominated the global cryptocurrency mining landscape until authorities cracked down in 2021. Beijing outlawed all cryptocurrency trading and mining activities, citing concerns over financial stability risks and the sector's conflict with national energy-conservation goals. This forced a massive exodus of mining operations from the mainland to countries like the United States and Kazakhstan.
However, recent data reveals a remarkable comeback. Blockchain analytics firm CryptoQuant now estimates that between 15% and 20% of global Bitcoin mining capacity is currently operating inside China. Data from Hashrate Index shows the country's share dropped to virtually zero after the 2021 crackdown but has since climbed back to become the world's third-largest mining hub, accounting for approximately 14% of global activity as of late October.
Data and Testimony Point to Underground Boom
This rebound is visibly reflected in the financial performance of companies serving the mining sector. Canaan Inc., a leading global manufacturer of Bitcoin mining rigs, has reported sharply rising domestic sales. Company filings reveal that revenue from China constituted a mere 2.8% of its global total in 2022, shortly after the ban crippled local demand. By last year, that figure had skyrocketed to 30.3%.
A separate source with direct knowledge of the matter told Reuters that China accounted for more than 50% of Canaan's sales in the second quarter of this year, although the company did not officially confirm this specific figure.
On-the-ground testimony supports the data. Duke Huang, a former miner based in Sichuan who quit after the 2021 ban, reported that several of his peers have recently returned to the business. "It's a sensitive area... But people who get cheap electricity are still mining," he told Reuters.
What's Driving the Resurgence?
Several key factors are fueling this underground revival:
Cheap, Abundant Power: Mining operations continue to concentrate in power-abundant regions like Xinjiang and Sichuan, where electricity is plentiful and inexpensive.
Data Center Glut: Industry insiders point to an oversupply of electricity and computing capacity in some provinces. This is partly driven by over-investment in data-center projects by financially strained local governments, creating favourable conditions for miners who can operate discreetly.
Profitability: The resurgence coincided with Bitcoin surging to record highs in October, driven by factors including former U.S. President Donald Trump's pro-crypto policies. While the cryptocurrency's price has since fallen by about a third, the earlier highs made mining highly profitable.
Regulatory Nuances: In an emailed statement, Canaan suggested a "subtle shift in China's posture toward digital assets" might be a factor. The Singapore-based firm also noted that "In China, the R&D, manufacturing, and sale of mining machines are permitted," drawing a distinction between hardware production and the act of mining itself.
Analysts note that this renewed mining activity could provide unexpected demand and price support for Bitcoin during a period of strong volatility for the digital asset.
Despite the clear evidence of renewed activity, officials maintain that mining remains illegal. Julio Moreno, head of research at CryptoQuant, summarized the situation: "Bitcoin mining is still officially banned in China. However, there continues to be significant capacity operating." The National Development and Reform Commission, which issued the original ban, did not respond to requests for comment from Reuters.
