Bitcoin mining is quietly staging a remarkable comeback in China, four years after the government issued a sweeping prohibition on all cryptocurrency mining and trading activities. According to data from Hashrate Index, which monitors global Bitcoin mining operations, China has reclaimed third position worldwide with approximately 14% of the global hashrate by the end of October—a stunning reversal from the near-zero share that followed the government’s crackdown in September 2021.
Individual and corporate miners are exploiting cheap electricity rates, surplus energy capacity, and the rapid expansion of data centers in energy-rich provinces like Xinjiang and Sichuan. This resurgence, occurring entirely underground and in defiance of official policy, signals one of the most significant developments the cryptocurrency market has witnessed in recent years—and could provide meaningful support for Bitcoin demand and price dynamics moving forward.
From Zero to Third Place: The Numbers Tell the Story
When Chinese authorities banned cryptocurrency trading and mining in September 2021, citing threats to financial stability and energy conservation goals, the country’s share of global Bitcoin mining hashrate collapsed virtually overnight. China had been the world’s dominant mining nation, controlling an estimated 65-75% of global computational power. The prohibition forced miners to relocate operations to Kazakhstan, the United States, Russia, and other jurisdictions, effectively eliminating China from the Bitcoin mining landscape.
The current reality looks dramatically different. According to Hashrate Index data, China’s Bitcoin mining output reached approximately 145 exahashes per second (EH/s) by late October—representing roughly 14% of the global network. Over just one quarter, this figure increased by 13.8%. CryptoQuant, another analytics provider, estimates that 15-20% of worldwide mining capacity now operates within China despite official prohibitions remaining firmly in place.
This positions China behind only the United States, which leads with 37.75% of global hashrate (approximately 389.3 EH/s), and Russia at 15.51% (approximately 160 EH/s). The three nations combined now control over 67% of global Bitcoin mining capacity, raising questions about network decentralization even as it demonstrates the persistent economic incentives driving mining operations regardless of regulatory prohibitions.
Why the Ban Failed: Economics Trump Policy
The resurgence stems from fundamental economic factors that government prohibition cannot easily suppress. Xinjiang province, located in northwestern China, has emerged as the epicenter of the underground mining revival primarily due to its abundance of electricity that cannot be efficiently transmitted to other regions.
Wang, a private miner from Xinjiang who spoke to Reuters on condition of anonymity using only his surname, explained the dynamics driving the comeback: “A significant amount of energy cannot be exported from Xinjiang, so it is utilized for crypto mining. New mining projects are under construction. Essentially, miners are drawn to areas where electricity is affordable”.
This surplus electricity problem extends beyond Xinjiang. A source from a Bitcoin mining rig manufacturer, speaking anonymously due to the sensitivity of the topic, attributed the rebound to excess electricity and computing power stemming from overinvestment in data centers by financially constrained local governments. These idle resources, originally intended for artificial intelligence and cloud computing applications, have found alternative use in cryptocurrency mining operations seeking cheap computational infrastructure.
Duke Huang, a Sichuan-based former miner who exited the business during the regulatory crackdown, confirmed that some of his acquaintances have quietly resumed operations. “It’s a sensitive area,” Huang acknowledged. “But people who get cheap electricity are still mining”.
Canaan’s Sales Data Reveals the Magnitude
Perhaps the most compelling evidence of China’s mining resurgence comes from equipment sales data. Canaan Inc. , the world’s second-largest manufacturer of Bitcoin mining machines behind Bitmain, has reported explosive growth in domestic sales that tracks precisely with the underground mining expansion.
Canaan’s China Revenue Trajectory:
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2022: 2.8% of global revenue from China (post-ban collapse)
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2024: 30.3% of global revenue from China
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Q2 Current Year: Over 50% of global revenue from China
This transformation from negligible domestic sales to majority revenue concentration occurred within just three years, demonstrating how rapidly miners have returned to Chinese operations.
Canaan’s overall financial performance reflects this trend. The company reported total revenues of $150.5 million for Q3, marking a striking 104.4% year-over-year growth. The company sold over 10 exahashes per second of computing power in a single quarter—a new record—while mining revenue reached $30.6 million, representing a 241% year-over-year increase.
Bitmain and MicroBT, the other two dominant mining equipment manufacturers (all three are Chinese companies collectively producing over 90% of global mining rigs), likely show similar patterns though detailed regional breakdowns are less publicly available.
The Regulatory Gray Zone
The contradiction between official prohibition and operational reality creates a peculiar regulatory environment. Since September 2021, when all crypto transactions were declared illegal, China’s state planning body and central bank have not reversed any policies. The ban remains formally in effect, and authorities could theoretically crack down on underground operations at any time.
Yet enforcement appears notably relaxed compared to the initial crackdown period. Patrick Gruhn, CEO of cryptocurrency market infrastructure firm Perpetuals.com, characterized the situation as demonstrating “Chinese political flexibility” when economic incentives become sufficiently strong in specific regions. He described the resurgence of mining activity in China as “one of the most important signals the market has seen in recent years”.
Several factors may explain this tolerance. Local governments in energy-surplus provinces face pressure to monetize stranded electricity resources. Underground mining operations provide economic activity and employment in regions with limited alternative industries. Additionally, Beijing’s broader digital asset stance appears to be evolving in subtle ways.
Signs of Policy Evolution
The mining resurgence coincides with emerging indications that Beijing may be softening its approach to digital currencies, which were previously viewed strictly as challenges to national currency sovereignty and potential channels for capital flight.
Hong Kong’s stablecoin legislation became effective in August, allowing the semi-autonomous city to compete with the United States in establishing a regulated environment for fiat-backed cryptocurrencies. While Hong Kong maintains separate regulatory frameworks from mainland China, the approval signals tolerance for cryptocurrency innovation within Chinese-controlled territory.
More significantly, reports indicate that Beijing is contemplating yuan-backed stablecoins to promote wider global adoption of its currency, essentially using cryptocurrency infrastructure to advance national monetary policy objectives rather than fighting it. This represents a dramatic conceptual shift from viewing all cryptocurrency as threat to recognizing potential utility for Chinese strategic interests.
Whether these developments presage eventual formal policy changes for mining specifically remains unclear. However, the combination of relaxed enforcement, expanding underground operations, and institutional experimentation with digital assets suggests that China’s relationship with cryptocurrency is more complex and evolving than the blanket prohibition implies.
Market Implications: What This Means for Bitcoin
For those seeking to get Bitcoins or currently holding cryptocurrency positions, China’s mining resurgence carries meaningful implications across multiple dimensions.
Supply and Demand Dynamics: The expansion of mining capacity globally—including this Chinese resurgence—increases Bitcoin production and theoretically could pressure prices through additional supply. However, mining merely accelerates the distribution of Bitcoin’s fixed 21-million-coin supply rather than creating additional coins. The real impact lies in who controls this computational power and how they manage newly mined coins.
Network Security and Decentralization: Bitcoin’s security depends on widely distributed mining preventing any single entity or jurisdiction from controlling majority hashrate. The concentration of 67% of global mining among just three countries (United States, Russia, and China) raises legitimate concerns about potential coordination or state-level intervention affecting network operations. For individuals who get Bitcoins and store them long-term, this geographic concentration represents a governance risk worth monitoring.
Price Support Through Mining Economics: Mining operations require substantial capital investment in equipment and ongoing electricity expenditures. Miners must sell portions of their Bitcoin production to cover operating costs, but typically prefer holding excess production when possible. Chinese miners returning to profitability through cheap electricity may add to holding behavior rather than aggressive selling, providing indirect price support.
Hashprice Pressure: Despite the positive narrative around China’s return, Bitcoin hashprice—the revenue miners earn per unit of computational power—recently fell to all-time lows due to weaker Bitcoin prices, low transaction fees, and elevated network difficulty. This pressure affects miner profitability globally and could moderate expansion enthusiasm if conditions persist.
The Equipment Manufacturers’ Dilemma
The three dominant Chinese mining equipment manufacturers—Bitmain, Canaan , and MicroBT—face complex strategic decisions as their domestic market revives while international tensions escalate.
All three companies are establishing production bases in the United States as trade conflicts reshape cryptocurrency supply chains. Bitmain commenced U.S. production last December following President Trump’s election victory. Canaan launched pilot production lines to circumvent tariffs after the “Liberation Day” tariff announcements. MicroBT stated it is “actively pursuing a localization strategy in the U.S.” to mitigate tariff impacts.
This dual approach—serving the reviving Chinese market while building U.S. manufacturing capacity—reflects uncertainty about both Chinese regulatory stability and international trade policy. Canaan has relocated its headquarters to Singapore while maintaining operations in China, hedging against potential crackdowns while capitalizing on current demand.
The company recently announced a landmark U.S. order for over 50,000 Avalon A15 Pro mining machines—the largest order in three years—demonstrating that international demand remains robust even as domestic Chinese sales surge. Canaan’s newest Avalon A16 series mining machines, featuring cutting-edge energy efficiency and computing power, are now available for pre-order globally.
The Underground Mining Infrastructure
Understanding how Chinese mining operations actually function provides context for assessing the resurgence’s sustainability. Operations typically locate in rural areas with access to cheap hydroelectric power (Sichuan, Yunnan) or coal-generated electricity (Xinjiang, Inner Mongolia). Facilities disguise themselves as data centers, research facilities, or simply avoid official registration entirely.
The mining rig manufacturer source who spoke to Reuters described how excess electricity capacity from data center overbuilding creates perfect conditions for cryptocurrency mining. Local governments that invested heavily in data infrastructure during the AI boom now face underutilized facilities and stranded power capacity. Mining operations absorb this surplus while generating revenue and employment, creating implicit incentives for local officials to ignore prohibitions.
This arrangement remains fragile. Central government authorities could order renewed crackdowns at any time, and local officials providing implicit protection could face consequences if Beijing prioritizes enforcement. Additionally, China’s carbon neutrality goals for 2026 could prompt policy actions affecting energy-intensive industries including cryptocurrency mining.
Implications for Those Seeking to Get Bitcoins
For individuals interested in ways to get Bitcoins, China’s mining resurgence affects market dynamics in several ways worth understanding.
Price Discovery: More mining globally means more Bitcoin entering circulation through block rewards. However, the fixed supply schedule means this simply accelerates existing distribution rather than creating inflation. Chinese miners getting Bitcoins through mining operations and potentially holding significant portions could reduce near-term selling pressure.
Exchange Availability: Despite the mining resurgence, Chinese exchanges remain prohibited from operating openly. Individuals in China seeking to get Bitcoins must still use VPNs to access international exchanges, peer-to-peer platforms, or over-the-counter channels. The mining comeback doesn’t change retail accessibility within China.
Market Volatility: The resurgence timing correlates with Bitcoin reaching record highs above $126,000 in October before declining roughly 31% to current levels around $86,000-$87,000. Whether Chinese mining expansion contributed to price appreciation or simply responded to it remains debatable—likely some combination of both dynamics. Future regulatory crackdowns could trigger volatility if Chinese operations suddenly cease again.
Network Hash Rate: Total global Bitcoin hashrate now exceeds 1,000 EH/s, with China contributing approximately 145-200 EH/s depending on estimates. Higher global hashrate increases mining difficulty, affecting profitability for mining operations worldwide. Those considering mining as a method to get Bitcoins face increasingly challenging economics requiring efficient equipment and cheap electricity.
What Happens Next
The sustainability of China’s mining comeback depends on several variables difficult to predict. Beijing could reinstate aggressive enforcement at any time, particularly if geopolitical tensions with the United States escalate or if mining operations attract unwanted international attention. China’s stated carbon neutrality goals could justify crackdowns on energy-intensive industries regardless of cryptocurrency-specific concerns.
Conversely, the implicit tolerance of underground operations may continue indefinitely if local economic benefits outweigh central government concerns. The exploration of yuan-backed stablecoins and Hong Kong’s regulatory developments suggest Beijing is reconsidering categorical opposition to all cryptocurrency activity.
For global Bitcoin markets, China’s 14-20% hashrate contribution represents meaningful capacity that affects network security, mining economics, and potentially price dynamics. The concentration of mining among three major nations—with China’s resurgence now confirmed—shapes the strategic landscape for Bitcoin’s continued evolution as both technology and financial asset.
Industry observers emphasize that mining never truly left China despite official claims—activity simply went underground. The current resurgence represents this underground reality becoming visible again through equipment sales data, hashrate analytics, and miner testimonials rather than genuine policy reversal. Whether visibility eventually prompts renewed suppression or acceptance remains the central uncertainty facing Chinese cryptocurrency operations and the global market participants who watch their trajectory.
