Despite being banned four years ago, Bitcoin mining is quietly resurging in China as individual miners and corporate operators exploit cheap electricity and a boom in data centres across energy-rich provinces, according to a Reuters report citing miners and industry data. China had been the worlds largest crypto-mining hub until Beijing outlawed all cryptocurrency trading and mining in 2021, blaming the sector for threatening financial stability and undermining energy-conservation goals. CryptoQuant now estimates that 15%20% of global Bitcoin mining capacity is operating inside China. Hashrate Index data shows that after Chinas share dropped to zero following the 2021 crackdown, the country has climbed back to the worlds third-largest mining hub, accounting for about 14% of global activity as of late October. The rebound is also reflected in sharply rising domestic sales for mining-rig maker Canaan Inc., whose China revenue has recovered far beyond post-crackdown levels. Analysts say the renewed activity could provide unexpected demand and price support for Bitcoin at a time when the digital asset has experienced strong volatility. Chinas state planning body, the National Development and Reform Commission, which issued the original ban, and the Xinjiang regional government did not respond to Reuters requests for comment. The 2021 clampdown forced miners to shut down operations across the mainland and relocate to countries such as the United States, Kazakhstan and other parts of Central Asia. The resurgence coincides with Bitcoin surging to record highs in October on the back of U.S. President Donald Trumps pro-crypto policies and rising distrust of the dollar, making mining more profitable. The cryptocurrency has since fallen by roughly a third as global risk appetite weakens. Mining operations remain concentrated in power-abundant regions such as Xinjiang, according to miners and rig manufacturers. Duke Huang, a Sichuan-based former miner who quit after the ban, told Reuters that several of his peers have recently returned to the business. Its a sensitive area But people who get cheap electricity are still mining, he said. Industry insiders say the resurgence is also being fuelled by an oversupply of electricity and computing capacity in some provinces, driven by over-investment in data-centre projects by financially strained local governments. A source at a mining rig manufacturer, who declined to be identified, said the glut has created favourable conditions for underground miners who can operate discreetly. Sales figures from Canaan, the worlds second-largest Bitcoin mining machine maker, underscore the shift. Company filings show that 30.3% of its global revenue came from China last yearup from just 2.8% in 2022, when the crackdown sharply curtailed domestic demand. A separate source with direct knowledge told Reuters that China accounted for more than 50% of Canaans sales in the second quarter of this year, although the company did not confirm the figure. Canaan attributed its rising domestic sales to disruptions in the U.S. caused by tariff uncertainty, higher Bitcoin prices that made mining more attractive, and what it described as a subtle shift in Chinas posture toward digital assets. In an emailed statement to Reuters, the Singapore-based firm said, In China, the R&D, manufacturing, and sale of mining machines are permitted, although it declined to comment on Chinas mining policies. The renewed activity comes amid indications that Beijing has softened its tone on digital assets more broadly. Hong Kongs stablecoin legislation took effect in August, positioning the city as a regulated hub for fiat-backed cryptocurrencies. Reuters also reported in August that China is considering allowing the use of yuan-backed stablecoins to expand global adoption of its currency and counter increasing U.S. influence in the digital-asset space. Still, officials maintain that mining remains illegal. Bitcoin mining is still officially banned in China. However, there continues to be significant capacity operating, said Julio Moreno, head of research at blockchain analytics firm CryptoQuant.The post Bitcoin mining in China rebounds appeared first on Linda Ikeji Blog.
