From dominance to prohibition: the repression of 2021
Before 2021, China controlled a large portion of the world’s Bitcoin (btc) mining. Data from the Cambridge Bitcoin Electricity Consumption Index shows that Chinese miners produced about 65% of the world’s Bitcoin computing power in 2020.
In 2021, the Chinese government took measures to stop mining activity. Authorities cited concerns about financial risks, capital outflows and the high use of electricity required for mining. In September 2021, the People’s Bank of China declared all cryptocurrency transactions illegal and confirmed a nationwide ban on mining.
The immediate result was a sharp drop in global hashrate, as many Chinese mining facilities closed or moved their equipment to countries such as the United States, Kazakhstan and Russia.
Although China banned crypto mining, global electricity use by BTC miners continued to increase. The nation’s decline was offset by rapid growth in other countries. Annual electricity use for Bitcoin mining increased from 89 terawatt-hours (TWh) in 2021 to approximately 121.13 TWh in 2023.
The recovery of mining operations 2024-2025
Mining operations have resumed in several parts of China, although they are smaller and less visible than the large farms that operated in the past.
According to Hashrate Index data reported in October 2025, China now accounts for around 14% of global Bitcoin mining, making it the third largest mining country after the United States and Kazakhstan. Analysts at on-chain research firm CryptoQuant go further and estimate that China’s actual Bitcoin mining share is between 15% and 20%.
The rapid rebound in sales of rig maker Canaan, one of the largest manufacturers of Bitcoin mining machines, also points to a resurgence of Bitcoin mining in China. China accounted for just 2.8% of Canaan’s revenue in 2022. By 2023, the figure had risen to 30%, and industry sources say it surpassed 50% in the second quarter of 2025.
Did you know? The Bitcoin network is protected by miners who compete to solve cryptographic puzzles, but no entity has controlled it in the long term. Geographic shifts from China to the United States and Central Asia show its resilience in the face of political and economic disruptions.
Reasons behind the resurgence of mining operations in China
According to Reuters reportMining operations have restarted in Xinjiang and Sichuan over the past two years or so. Xinjiang is an energy-rich province that has supported mining activity. Since much of its surplus energy cannot be transmitted outside the region, it is often used for crypto mining.
Many inland regions of China produce more electricity than they can efficiently transmit to coastal cities. In provinces such as Xinjiang and Sichuan, surplus energy obtained mainly from coal would not be used. Using this low-cost or stagnant electricity to power mining machines has become a cost-effective option.
Local governments have also built large data centers in recent years. When regular demand for these facilities is lower than expected, the owners can rent space and power to Bitcoin miners. The rise in Bitcoin prices since 2024 has further boosted the profits of these miners.
Excess data center capacity combined with rising Bitcoin prices may have created an optimal environment for the resurgence of cryptocurrency mining.
The underlying factors behind the increase in Bitcoin mining activity include the following:
Availability of economical or underutilized energy: When provinces like Xinjiang and Sichuan have more than enough power, the surplus can be used for mining.
Surplus IT infrastructure: Overdeveloped data center facilities are actively seeking customers to make use of their capacity.
Elevated Bitcoin Price Environment: A high Bitcoin price, supported in part by favorable changes in cryptocurrency policies in the US, improves mining profitability.
Resurgent mining activity is concentrated in energy-rich regions:
Xinjiang has abundant coal and wind power, as well as established industrial facilities.
Sichuan, known for its low-cost hydropower during the rainy season.
Other western provinces with surplus energy and favorable local conditions.
Did you know? Every four years, Bitcoin Halving that reduces miners’ rewards by 50%. This built-in scarcity mechanism mimics gold mining and often triggers important market cycles while shaping long-term supply dynamics.
China’s changing attitude towards digital assets
China’s policy towards digital assets is moving away from outright rejection and towards strategic and selective acceptance. Beijing is showing greater openness to carefully regulated digital asset infrastructure.
Hong Kong’s stablecoin licensing framework, which came into force in August 2025, reflects this broader approach. Hong Kong is part of China, although it is designated as a Special Administrative Region.
On the mainland, authorities are exploring yuan-backed stablecoins as a way to increase international use of the renminbi, China’s currency. China is also rapidly boosting its central bank’s digital currency, e-CNY, and integrating it into public services, cross-border pilot programs and everyday retail payments.
These developments show that China’s approach is shifting from comprehensive bans to controlled experimentation. The operation of digital assets that support financial stability and promote national economic objectives may be permitted.
