From domination to prohibition: repression in 2021

Before 2021, China controlled a immense portion of the world’s Bitcoin (BTC) mining. Data from the Cambridge Bitcoin Electricity Consumption Index shows that Chinese miners produced approximately 65% ​​of global Bitcoin computing power in 2020.

In 2021, the Chinese government decided to stop mining activities. Authorities expressed concerns about financial risks, capital outflow and the high electricity consumption required for mining. In September 2021, the People’s Bank of China declared all cryptocurrency transactions illegal and confirmed a nationwide mining ban.

The immediate result was a keen decline in global hashrate as many Chinese mines closed or moved their equipment to countries such as the US, Kazakhstan and Russia.

Even though China banned cryptocurrency mining, global electricity consumption by BTC miners continued to augment. The country’s decline was offset by rapid growth in other countries. Annual electricity consumption for Bitcoin mining increased from 89 terawatt hours (TWh) in 2021 to approximately 121.13 TWh in 2023.

Revival of mining activities in 2024-2025

Mining operations have resumed in various parts of China, although they are smaller and less noticeable than the immense farms that operated in the past.

According to Hashrate Index data reported in October 2025. China currently accounts for approximately 14% of global Bitcoin mining, making it the third largest mining country after the US and Kazakhstan. Analysts from the Onchain CryptoQuant research company go further, appreciating that the actual share of Bitcoin mining in China is between 15% and 20%.

Rapidly rising sales of rig maker Canaan, one of the largest makers of bitcoin mining machines, also point to a resurgence in bitcoin mining in China. China accounted for just 2.8% of Canaan’s revenue in 2022. That increased to 30% by 2023, and industry sources say it exceeded 50% in the second quarter of 2025.

Did you know? The Bitcoin network is secured by miners competing to solve cryptographic puzzles, but no single entity has ever controlled it in the long run. Geographic shifts from China to the US to Central Asia demonstrate its resilience to political and economic disruptions.

Reasons for the revival of mining activities in China

According to Reuters reportmining operations have resumed in Xinjiang and Sichuan for about two years. Xinjiang is an energy-rich province that supports mining activities. Since much of the excess energy cannot be transferred outside the region, it is often used for cryptocurrency mining.

Many of China’s inland regions produce more electricity than they can efficiently transmit to coastal cities. In provinces such as Xinjiang and Sichuan, excess energy drawn mainly from coal would remain unused. Using this budget-friendly or bundled electricity to power mining machinery has become a viable option.

Local governments have also built immense data centers in recent years. When regular demand for these facilities is lower than expected, owners can rent space and power to Bitcoin miners. Rising Bitcoin prices from 2024 have further increased the profits of these miners.

Excessive data center capacity combined with rising Bitcoin prices may have created an optimal environment for a resurgence in cryptocurrency mining.

Factors underlying the augment in Bitcoin mining activity include:

• Availability of inexpensive or unused power: When provinces like Xinjiang and Sichuan have more than enough power, the surplus can be used for mining.

• Surplus computing infrastructure: Overdeveloped data center facilities are actively looking for customers who would like to employ their capacity.

• Elevated Bitcoin Price Environment: The high price of Bitcoin, partially supported by favorable changes in cryptocurrency policy in the US, improves mining profitability.

Resurgent mining activity is concentrated in energy-rich regions:

• Xinjiang with immense coal and wind resources and existing industrial facilities.

• Sichuan, known for budget-friendly hydropower during the rainy season.

• Other western voivodeships with energy surpluses and favorable local conditions.

Did you know? Every four years Bitcoin is undergoing a halving which reduces miners’ rewards by 50%. This built-in scarcity mechanism mimics gold mining and often triggers major market cycles while shaping long-term supply dynamics.

China’s changing approach to digital assets

China’s policy towards digital assets is moving away from outright rejection and towards selective, strategic acceptance. Beijing is showing greater openness to carefully regulated digital asset infrastructure.

The Hong Kong stablecoin licensing framework, which came into force in August 2025, reflects this broader approach. Hong Kong is part of China, although designated as a Special Administrative Region.

Authorities on the mainland are exploring yuan-backed stablecoins as a way to boost international employ of the renminbi, China’s currency. China is also rapidly expanding its central bank digital currency, e-CNY, and integrating it with public services, cross-border pilot programs and everyday retail payments.

The developments show that China’s approach is shifting from comprehensive bans to controlled experiments. Digital assets that support financial stability and contribute to national economic objectives may be permitted.