Bitcoin Mining Activity Rebounds in China Despite 2021 Ban

Estimated reading time: 3 minutes

• China’s bitcoin mining activity has quietly rebounded, reclaiming a 14% global share despite the 2021 national ban.
• Cheap electricity and surplus data-center capacity in regions like Xinjiang are drawing miners back.
• Rising rig sales and industry data show mining operations growing even as the official prohibition remains in place.

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China is seeing a renewed surge in bitcoin mining, four years after outlawing the sector, as miners take advantage of inexpensive electricity and expanding data-center capacity in provinces with abundant energy resources, according to industry participants and data reviewed by Reuters.

Before the 2021 prohibition on cryptocurrency trading and mining, China was the world’s leading hub for bitcoin mining. Following the crackdown, the country’s share of global activity plunged to zero.

Fresh figures from Hashrate Index indicate that China has quietly re-emerged as a major mining center, ranking third worldwide with a 14% share of global bitcoin mining activity as of late October. Mining-rig manufacturer Canaan Inc has also reported a significant rebound in domestic sales, further signaling renewed operations inside the country.

Cheap Electricity Fuels Mining’s Return

Some miners say access to low-cost power is driving the resurgence. Wang, an independent miner based in Xinjiang, said he returned to mining last year.

“A lot of energy cannot be transmitted out of Xinjiang, so you consume it in the form of crypto mining,” he said. “New mining projects are under construction. What I can say is that people mine where electricity is cheap.”

Requests for comment sent to China’s National Development and Reform Commission, which issued the 2021 ban, and to the Xinjiang government went unanswered.

Market Conditions Shift

The uptick in activity has coincided with bitcoin reaching record highs in October, helped by U.S. President Donald Trump’s supportive stance on digital assets and increasing unease toward the U.S. dollar. Despite a subsequent pullback of roughly one-third from its October peak, higher prices have made mining more profitable.

Patrick Gruhn, CEO of Perpetuals.com, said China’s approach can adapt when local economic incentives are strong.

“Chinese policy flexibility emerges when economic incentives are strong in specific regions,” he said. “The resurgence of mining activity in China is one of the most important signals the market has seen in years.”

Even without formal policy easing, he said the prospect of a softer regulatory environment “could act as a tailwind for bitcoin’s narrative as a global, state-resilient asset.”

Mining remains particularly active in regions with ample power resources such as Xinjiang. Duke Huang, a former Sichuan miner who left the business after the crackdown, said some acquaintances have recently restarted operations.

“It’s a sensitive area … But people who get cheap electricity are still mining,” he said.

A representative from a mining-rig producer, who asked not to be identified due to the sensitivity of the subject, said excess electricity and surplus computing power—stemming from over-investment in data centers by financially struggling local governments—have also contributed to mining’s rebound.

Rig Sales Highlight Domestic Demand

Sales data from mining-machine producers support the trend. Canaan reported that 30.3% of its global revenue came from China last year, a sharp rise from 2.8% in 2022. A source with direct knowledge said China accounted for more than 50% of sales in the second quarter of this year, though Canaan did not confirm that figure.

The Singapore-based company said its increased sales in China were influenced by uncertainty over U.S. tariffs, rising bitcoin prices, and what it described as a subtle shift in China’s digital-asset environment. Canaan said it complies with Chinese rules but declined to comment on mining policies.

“In China, the R&D, manufacturing, and sale of mining machines are permitted,” the company said in an emailed statement.

Evolving Policy Signals

Although the national ban on bitcoin mining remains officially in place, recent developments suggest a more nuanced posture toward digital assets. Hong Kong’s stablecoin legislation, which took effect in August, aims to position the city as a regulated hub for fiat-backed cryptocurrencies. Reuters reported earlier this year that China was considering yuan-based stablecoins to support the currency’s international reach.

“Bitcoin mining is still officially banned in China. However, there continues to be significant capacity operating,” said Julio Moreno, head of research at CryptoQuant.

The company estimates that China currently accounts for 15% to 20% of global mining capacity.

Liu Honglin, founder of Man Kun Law Firm, said authorities may struggle to fully eliminate the industry.

“I personally think government policies against mining will be gradually loosened, because you simply cannot stop such activities completely,” he said.

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Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by the Editorial Team.

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