Bitcoin mining operations have returned to China despite a four-year ban, with the country now controlling 14% of the global market share as of late October, according to Hashrate Index data. The resurgence follows Beijing's 2021 crackdown that drove the industry's market share to zero, forcing miners to relocate overseas. Individual and corporate miners are now exploiting cheap electricity and excess data center capacity in energy-rich provinces like Xinjiang, suggesting a subtle shift in enforcement despite the official prohibition remaining in place.
What Happened: Mining Returns Underground
China banned all cryptocurrency trading and mining in September 2021, citing threats to financial stability and energy conservation goals. The prohibition eliminated the country's position as the world's largest crypto mining hub virtually overnight. Hashrate Index, which monitors Bitcoin mining activities globally, now shows China has climbed back to third place with a 14% share by the end of October, marking a significant reversal.
Wang, a private miner operating in Xinjiang who requested identification by last name only, said he began mining operations 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 told Reuters.
"New mining projects are under construction." He added that miners gravitate toward locations with cheap electricity rates.
The comeback extends beyond individual operators. Canaan Inc, the world's second-largest Bitcoin mining machine manufacturer, reported Chinese sales accounting for 30.3% of global revenues last year, up sharply from 2.8% in 2022 following the crackdown, according to company filings.
A source with direct knowledge said China's contribution jumped above 50% during the second quarter this year, though Canaan declined to confirm the quarterly breakdown.
Duke Huang, a Sichuan-based former miner who exited the business during the regulatory ban, said some acquaintances have quietly resumed operations. "It's a sensitive area," Huang said. "But people who get cheap electricity are still mining." The timing coincides with Bitcoin reaching record highs in October driven by U.S. President Donald Trump's pro-cryptocurrency policies, though prices have since dropped roughly a third from that peak. A source at a Bitcoin mining rig maker, speaking on condition of anonymity, attributed the rebound to excess electricity and computing capacity following overinvestment in data centers by cash-strapped local governments.
China's National Development and Reform Commission, which issued the 2021 ban, and the Xinjiang government did not respond to faxed requests for comment.
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Why It Matters: Policy Flexibility Signals
Patrick Gruhn, CEO of Perpetuals.com, a crypto market infrastructure provider, characterized the development as one of the most significant market signals in recent years. "Chinese policy flexibility emerges when economic incentives are strong in specific regions," Gruhn said. He noted that even hints of China easing its stance could strengthen Bitcoin's narrative as a state-resilient global asset, despite no official relaxation of mining curbs.
Julio Moreno, head of research at CryptoQuant, a blockchain data and analytics firm, said substantial capacity continues operating despite the official ban. CryptoQuant estimates 15% to 20% of global Bitcoin mining capacity currently operates within China.
Liu Honglin, founder of Man Kun Law Firm, suggested enforcement may continue softening. "I personally think government policies against mining will be gradually loosened, because you simply cannot stop such activities completely," Liu said. The trend aligns with broader signs of Beijing moderating its digital asset posture, including Hong Kong's stablecoin bill taking effect in August and reported consideration of yuan-backed stablecoins to compete with U.S. initiatives.
Canaan attributed its growing Chinese sales to U.S. tariff uncertainty disrupting American sales, rising Bitcoin prices improving mining profitability, and what the Singapore-based company called "a subtle shift in China's digital asset posture." The company emphasized its activities remain compliant with Chinese regulations, noting that research, development, manufacturing and sales of mining machines remain permitted under current rules.
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Closing Thoughts
Bitcoin mining has staged an unexpected comeback in China four years after Beijing's ban, driven by cheap electricity in provinces like Xinjiang and excess data center capacity from overinvestment. China now holds 14% of the global mining market share, with industry sources estimating 15% to 20% of worldwide capacity operates within the country despite official prohibitions remaining in effect. The resurgence signals potential policy flexibility as economic incentives strengthen in specific regions.
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