Bitcoin Mining Resurges in China Despite 2021 Ban, Now Accounts for 14% of Global Hashrate

Bitcoin mining is quietly making a comeback in China, despite a comprehensive ban on cryptocurrency activities imposed in 2021. According to a Reuters report, the country has climbed to the third spot globally in mining market share, now accounting for approximately 14% of global mining operations, up from effectively zero after the crackdown.

Drivers of the Resurgence:

• Energy Surplus: The return is concentrated in energy-rich provinces, such as Xinjiang, where miners are exploiting cheap electricity and surplus computing capacity resulting from overinvestment in local data centers.
• Economic Incentives: Miners and industry sources report that the excess energy in these regions, which cannot easily be transmitted elsewhere, is being consumed through crypto mining, suggesting regional economic pressures may be driving policy flexibility.
• Equipment Sales Data: Sales figures from mining rig manufacturers support the trend. Canaan reported that 30.3% of its global revenues came from China last year, a sharp increase from 2.8% in 2022.

Market and Policy Implications:

• Significant Signal: Patrick Gruhn, CEO of Perpetuals.com, called the resurgence “one of the most important signals the market has seen in years.” Blockchain analytics firm CryptoQuant estimates that China’s share could be as high as 15% to 20%.
• Policy Softening: The comeback coincides with other signs that Beijing may be easing its restrictive stance on digital assets. Examples include Hong Kong’s new stablecoin bill and reported internal consideration of yuan-backed stablecoins.
• Regulatory Silence: China’s National Development and Reform Commission (NDRC), which issued the 2021 ban, has not commented on the reported mining activity.

The mining comeback suggests that regional economic needs are overriding the national ban, positioning China as a significant, though officially unrecognized, player in the global Bitcoin mining landscape once again.