China's Evolving Stance on Bitcoin Mining: From Crackdown to Recovery

In recent years, China's approach to Bitcoin mining has undergone significant changes. Following a major crackdown in 2021, the mining landscape in China is showing signs of resurgence with new activity in energy-abundant regions. This article explores the dynamics of mining operations in China, the reasons behind their recovery, and shifts in the country's regulatory attitude towards digital assets.

Key Takeaways

Before 2021, China was responsible for approximately 65% of global Bitcoin mining.
In September 2021, the Chinese government deemed all cryptocurrency transactions illegal, leading to a notable decline in Bitcoin mining operations.
By late 2025, mining has resumed in smaller capacities across China, accounting for around 14% of global Bitcoin mining.
Factors contributing to the revival include access to cheap energy, surplus infrastructure, and rising Bitcoin prices.
China's regulatory stance towards digital assets is shifting towards selective acceptance, with greater openness to regulated frameworks.

Overview of the 2021 Crackdown on Mining

Before 2021, China dominated global Bitcoin mining, holding about 65% of the world's Bitcoin computing power as indicated by the Cambridge Bitcoin Electricity Consumption Index. However, the landscape changed dramatically when, in 2021, the Chinese government initiated a crackdown on mining, citing concerns over financial risks, capital flight, and high electricity consumption associated with the practice. In September of that year, the People's Bank of China declared all cryptocurrency transactions illegal, enforcing a nationwide ban on mining activities.

The immediate impact of this decision was a steep drop in global hashrate due to many Chinese mining operations shutting down or relocating to countries like the United States, Kazakhstan, and Russia. Despite the ban in China, the overall electricity use by Bitcoin miners increased, rising from 89 terawatt-hours (TWh) in 2021 to approximately 121.13 TWh in 2023, as other regions stepped up their mining activities.

Total Bitcoin electricity consumption

Recovery of Mining Operations (2024-2025)

In recent years, mining operations have started to resurface in various parts of China, albeit at a smaller scale than before. As of October 2025, data from the Hashrate Index indicates that China now represents approximately 14% of global Bitcoin mining, making it the third-largest mining nation after the United States and Kazakhstan. CryptoQuant analysts suggest that the real share might be between 15% and 20%.

The resurgence in Bitcoin mining is also reflected in the sales growth of mining hardware manufacturers like Canaan. While Canaan only garnered 2.8% of its revenue from China in 2022, this number increased to 30% by 2023, and industry insiders report that it surpassed 50% in the second quarter of 2025.

Fun Fact!

Bitcoin’s network relies on miners competing to solve cryptographic puzzles. Interestingly, no single entity has ever maintained long-term control over it. The shifts in mining from China to the United States and Central Asia illustrate the network's resilience against political and economic challenges.

Reasons Behind the Mining Resurgence

According to a report from Reuters, mining activities have restarted within regions like Xinjiang and Sichuan over the past couple of years. Xinjiang, with its abundant energy resources, is particularly supportive of mining operations. Much of the excess energy produced in inland provinces often escapes efficient transmission to coastal areas, making mining an attractive alternative for utilizing low-cost electricity.

Local governments have also constructed extensive data centers recently. When demand falls short, these centers can lease out space and power to Bitcoin miners, allowing for increased profitability, especially as Bitcoin prices have surged since 2024.

Key Factors Driving the Increase in Bitcoin Mining:

Access to Low-Cost Energy: Regions such as Xinjiang and Sichuan often produce surplus power, perfect for mining operations.
Surplus Infrastructure: Overdeveloped data center facilities actively seek clients to utilize their excess capacity.
Rising Bitcoin Price Environment: Increased Bitcoin prices driven by favorable regulatory changes in the U.S. have made mining more profitable.

Resurgent mining activities are primarily centered in areas rich in energy resources, such as:

Xinjiang, known for its coal and wind resources.
Sichuan, famous for its cost-effective hydropower during the rainy season.
Other western provinces boasting surplus energy and favorable conditions.

Interesting Note!

Every four years, Bitcoin experiences a halving, reducing miner rewards by half. This scarcity feature mimics gold mining and often influences market cycles while shaping long-term supply dynamics.

Shifting Perspectives: China’s Attitude Towards Digital Assets

China's approach to digital assets is transitioning from outright rejection to a more selective and strategic acceptance. The regulatory landscape indicates a willingness to explore regulated frameworks for digital assets.

For instance, Hong Kong implemented a stablecoin licensing regime that began in August 2025. Although Hong Kong is part of China, it functions as a Special Administrative Region with its regulations. Meanwhile, on the mainland, authorities are investigating yuan-backed stablecoins to enhance international usage of the Chinese currency. Furthermore, China is making rapid advancements with its central bank digital currency, e-CNY, which is being integrated into various public services and retail transactions.

These developments signal a significant shift in China’s outlook, moving away from comprehensive bans towards controlled experimentation with digital assets that promote financial stability and align with national economic interests.