China Quietly Reclaims Its Place in Global Bitcoin Mining

Bitcoin (BTC) mining is undergoing a notable resurgence in China despite the government’s official prohibition of the practice in 2021, according to Reuters.After nearly vanishing from the global mining landscape, China has re-emerged as the third-largest contributor, accounting for an estimated 14% of global activity by October, based on data from Hashrate Index. This renewed presence is largely attributed to miners and firms operating discreetly in areas with plentiful and affordable electricity, particularly Xinjiang, where excess power supplies and rapid data-center development offer favorable conditions.

Miners interviewed by Reuters indicated that surplus electricity in regions such as Xinjiang and Sichuan is fostering the rise of new covert operations, prompting some former miners to return. CryptoQuant estimates that between 15% and 20% of the world’s mining capacity is now based in China.

The article also notes that Canaan, a major producer of mining hardware, has experienced a strong recovery in domestic sales, supported by higher bitcoin prices and uncertainty surrounding potential U.S. tariffs that have dampened overseas demand.

While China has not publicly changed its stance on the mining ban, its broader approach to digital assets appears to be easing. Legislative developments in Hong Kong regarding stablecoins and discussions about yuan-linked stablecoins suggest a more adaptive regulatory tone. Meanwhile, Bitcoin’s hashprice reached a record low on Friday. This metric, which reflects expected miner revenue per unit of hashrate, fell to $34.2 per PH/s, according to Luxor.

Hashprice is influenced by four primary factors: network difficulty, bitcoin’s market price, the block subsidy, and transaction fees. It tends to rise with increases in bitcoin’s price or fee activity and decline when mining difficulty intensifies. With bitcoin trading more than 30% below its October peak, weak transaction fees, and a network hashrate slightly above one zettahash—around 10% below recent highs—miners are experiencing significantly reduced revenue. The next difficulty adjustment, anticipated on Wednesday, is projected to drop by just over 2%.

China’s unsuccessful attempt to eliminate Bitcoin mining mirrors similar experiences in other countries. Over the past decade, multiple governments have sought to ban cryptocurrency, only to retreat once they recognized the challenges in enforcing such restrictions. Examples include Russia, which considered a comprehensive crypto ban in 2022, as well as Zimbabwe, Bolivia, India, and Nigeria.