Why China’s Bitcoin mining is roaring back after a four-year clampdown
China’s role in Bitcoin mining is quietly expanding again, defying what many assumed was a permanent exit after the 2021 crackdown. A combination of cheap, underused energy, excess data center capacity and a more nuanced government stance on digital assets is pulling miners back into the mainland – this time in a lower-profile, more fragmented form.
From global leader to sudden shutdown
Until mid-2021, China overwhelmingly dominated the Bitcoin mining landscape. Data from the Cambridge Bitcoin Electricity Consumption Index indicates that Chinese operations were responsible for roughly 65% of global Bitcoin computing power in 2020. Vast industrial-scale “mining farms” in western and southwestern provinces effectively anchored the network’s hashrate.
Then came the crackdown. In 2021, Chinese authorities moved aggressively to dismantle domestic mining. Officials framed the decision around three main concerns:
– financial instability and speculative risks,
– potential capital flight via crypto channels,
– and the heavy electricity consumption associated with proof-of-work mining.
In September 2021, the People’s Bank of China went further, labeling all cryptocurrency transactions illegal and confirming a nationwide prohibition on mining. Facilities were ordered to power down, equipment was seized or sold off, and miners scrambled to relocate rigs overseas.
Global hashrate shock – and rapid recovery
The immediate impact was a dramatic drop in global Bitcoin hashrate. For several months, the network’s computing power fell sharply as Chinese hashrate went offline. However, the vacuum created an opportunity elsewhere. Mining firms flocked to jurisdictions such as the United States, Kazakhstan and Russia, where they could access cheaper power and friendlier regulatory environments.
Despite China’s withdrawal, overall electricity consumption by Bitcoin mining did not permanently decline. While China’s share collapsed, other countries ramped up capacity. Annual Bitcoin mining power usage increased from around 89 TWh in 2021 to approximately 121 TWh in 2023, suggesting that the industry not only recovered but continued expanding beyond China’s borders.
The quiet comeback: 2024–2025
Fast forward three to four years, and the picture is changing again. Mining operations are slowly reappearing in several regions inside China, though they look very different from the huge, high-profile farms of the pre-2021 era. Today’s Chinese miners tend to operate in smaller clusters, often embedded in existing industrial facilities or data centers, and they aim to stay out of the spotlight.
According to Hashrate Index figures cited in late 2025, China now contributes roughly 14% of global Bitcoin mining power, placing it third worldwide behind the United States and Kazakhstan. On-chain research firm CryptoQuant offers an even higher estimate, suggesting China’s real share may lie between 15% and 20%, once unreported and off-grid operations are taken into account.
Hardware sales paint a similar picture. Canaan, one of the world’s largest manufacturers of Bitcoin mining machines, has seen a dramatic shift in its revenue mix. China represented only 2.8% of Canaan’s income in 2022. By 2023, this surged to about 30%, and industry insiders report that the domestic share exceeded 50% by the second quarter of 2025. Robust local demand for mining rigs is hard to reconcile with the notion that China is “out” of Bitcoin mining.
A resilient network, shifting geographies
Bitcoin’s security model relies on miners competing globally to solve cryptographic puzzles and add new blocks. No single government or company has permanently controlled this process. Over the past decade, the network’s hashrate has migrated from China to North America, Central Asia, and now partially back to China, underlining Bitcoin’s adaptability to political and economic pressures.
These geographic shifts are not just about technology; they are also about incentives. Wherever cheap power, idle infrastructure and acceptable regulatory risk overlap, miners tend to follow.
Why miners are returning: surplus energy and stranded power
One of the main drivers of the renewed activity is energy that would otherwise be wasted.
Provinces such as Xinjiang and Sichuan generate more electricity than they can economically transmit to major population centers in eastern China. Grid limitations, distance and the mismatch between production and consumption mean large quantities of power – often from coal or hydropower – remain underutilized or entirely stranded.
Bitcoin mining offers a way to monetize this surplus. In inland regions, tapping into low-cost excess electricity to power ASIC machines can be more lucrative than letting it go unused. Miners typically negotiate favorable rates with local partners, making operations viable even in a heavily regulated environment, provided they keep a low profile and sometimes operate under the umbrella of broader “computing” or “data” projects.
The role of data center overbuild
Another underappreciated factor is China’s rapid expansion of data center infrastructure. In recent years, local governments and private firms invested heavily in large computing facilities to support cloud services, AI workloads and the broader digital economy. In some areas, capacity now outstrips actual demand.
When those facilities struggle to find enough conventional clients, renting out rack space and power to Bitcoin miners becomes an attractive stopgap. From the operator’s perspective, miners are just another high-intensity computing customer who can fill empty halls and offset fixed costs like cooling, staffing and grid access.
For miners, these data centers provide a semi-legitimate cover: operations can be described as generic “high-performance computing,” making them less visible than standalone mining farms with rows of containers and distinctive noise signatures.
Bitcoin’s price tailwind and U.S. policy shifts
Rising Bitcoin prices since 2024 have only strengthened the case for resuming or expanding mining. A higher BTC price increases the revenue miners earn per unit of hashrate, making even moderately priced power more profitable.
Changes in cryptocurrency policy abroad, particularly in the United States, also matter indirectly. A more structured regulatory approach to Bitcoin and the emergence of large, regulated financial products have improved institutional sentiment towards the asset. When global capital flows into Bitcoin, it typically translates into higher prices, which in turn justify new or restarted mining operations worldwide – including in China.
In this environment, the combination of elevated Bitcoin prices, stranded or cheap energy, and excess computing infrastructure has created near-ideal conditions for a resurgence in Chinese mining.
Where activity is concentrated
The renewed mining presence in China is not evenly distributed. It is largely clustered in regions with abundant power and compatible local policies:
– Xinjiang – Rich in coal and wind resources, this region has long hosted energy-intensive industry. The availability of surplus electricity and established industrial infrastructure makes it a natural home for covert or semi-official mining projects.
– Sichuan – Famous within the mining world for its cheap hydropower during the rainy season. Historically, miners would migrate there seasonally to take advantage of low-cost electricity. Similar patterns are emerging again, though on a more discreet scale.
– Other western provinces – Several interior regions with excess generation capacity, cooler climates and government ambitions to grow their digital economies are quietly becoming hubs for new, lower-visibility mining setups.
Collectively, these locations act as pressure valves for China’s energy system, turning what might be wasted power into digital assets – albeit in a gray regulatory zone.
China’s evolving stance on digital assets
China’s approach to digital assets is no longer a simple story of blanket prohibition. The official line remains skeptical of speculative crypto trading and unregulated capital flows, but there are signs of a more selective and strategic attitude.
The government has invested heavily in its own central bank digital currency and continues to promote blockchain technologies for supply chains, finance and public services. At the same time, authorities are experimenting with tightly controlled digital asset frameworks in certain jurisdictions and sectors rather than banning everything outright.
Beijing’s emerging strategy can be summarized as:
– Reject retail speculation and unofficial payment systems.
– Encourage state-supervised digital finance and infrastructure.
– Allow certain forms of crypto-related activity when they align with economic or technological goals and remain under regulatory oversight.
Within this context, some Bitcoin mining can be tolerated—especially when it helps absorb surplus power, supports local employment or fits into broader “new infrastructure” initiatives—so long as it does not become politically embarrassing or systemically risky.
Hong Kong and the regional signal
One of the clearest indicators of shifting attitudes is the regulatory experimentation happening in Hong Kong. The city has rolled out a licensing framework for digital asset businesses, including stablecoin issuers and exchanges, positioning itself as a regulated gateway for crypto and tokenized finance in the region.
While Hong Kong operates under a different legal system, its policy direction rarely runs completely counter to Beijing’s strategic interests. The development of a clearly defined regime for digital asset infrastructure there sends a signal: China is not walking away from the digital asset economy, but it wants it channeled through controllable, institutionally focused structures.
For miners inside the mainland, this evolving environment suggests that outright reversals of the 2021 bans are unlikely in the near term, but targeted toleration of certain forms of mining—especially those integrated into broader data and computing projects—could grow.
Why this matters for Bitcoin and global miners
China’s return as a significant mining hub has several implications:
– Network security and decentralization – A higher hashrate, even partially concentrated in China, strengthens Bitcoin’s resistance to attacks. However, if any single jurisdiction becomes too dominant, it raises concerns about regulatory capture. The current 15–20% share is substantial but far from the two-thirds dominance seen before 2021.
– Competition and profitability – As Chinese hashrate climbs, global mining difficulty adjusts upward. Miners in other countries face tighter margins unless they can access similarly cheap energy or more efficient hardware.
– Energy market dynamics – The use of stranded and surplus energy for mining reinforces the narrative that Bitcoin can serve as a flexible “buyer of last resort” for electricity, absorbing oversupply and potentially stabilizing some grids.
– Regulatory playbook – China’s shift from total exclusion to selective tolerance may influence how other countries think about Bitcoin: rather than a binary choice between ban or embrace, they might adopt nuanced frameworks based on energy, capital flow control and industrial policy.
Key risks and constraints inside China
Despite the resurgence, Chinese miners operate under constant uncertainty. Authorities can still enforce closures, tighten inspections or use energy and environmental rules to squeeze projects at any moment. Miners respond by:
– running smaller, more distributed operations,
– co-locating in industrial parks and data centers to disguise activities,
– and forming relationships with local officials and power providers to reduce the risk of abrupt shutdowns.
Policy priorities such as emissions targets, financial stability and capital control will continue to limit how large and visible Bitcoin mining can become. Any surge that appears to undermine these goals could be met with another wave of enforcement.
Looking ahead: can China regain its old dominance?
A full return to the pre-2021 era, when China controlled the majority of Bitcoin’s hashrate, appears unlikely in the near term. Too many factors—geopolitics, capital control, energy policy, and the desire to avoid large-scale speculative manias—push against that kind of dominance.
However, a sustained share in the mid-teens or even low twenties is plausible if current conditions persist:
– energy surpluses remain significant in western provinces,
– data center overcapacity continues,
– Bitcoin’s price stays high enough to justify risk,
– and regulators maintain a pragmatic, selectively tolerant stance.
In that scenario, China would remain one of several major mining centers rather than the overwhelming leader it once was.
The bottom line
China’s Bitcoin mining sector is not back to its former glory, but it is far from dead. Behind the scenes, miners are exploiting cheap, underutilized power and idle data center capacity, while policymakers move from outright rejection of digital assets toward a more strategic, controlled engagement.
For Bitcoin, this quiet resurgence underscores a core feature of the network: when conditions in one country become hostile, hashrate shifts elsewhere—but when incentives realign, it can also flow back. The new Chinese mining landscape is smaller, more discreet and more entangled with broader digital infrastructure—but it is once again a meaningful part of Bitcoin’s global backbone.