Despite being outlawed four years ago, bitcoin mining is quietly making a comeback in China, according to miners and industry statistics, as both individual and corporate miners take advantage of cheap power and a growth in data centres in some energy-rich areas.
China was the largest cryptocurrency mining nation in the world, before Beijing outlawed all cryptocurrency trading and mining in 2021, citing risks to the nation’s financial stability and energy conservation, Reuters reported.
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Crypto mining is coming back
According to Hashrate Index, which monitors bitcoin mining activity, China returned to third position at the end of October with a 14% share after its worldwide bitcoin mining market share fell to zero due to the ban.
Demand and price support for the largest cryptocurrency in the world may be provided by the revival of bitcoin mining, which has also been confirmed by rig manufacturer Canaan Inc., opening a new tab, and fast-rebounding sales in China.
According to Wang, a private miner in Xinjiang, he began mining in the energy-rich province at the end of last year.
“A lot of energy cannot be transmitted out of Xinjiang, so you consume it in the form of crypto mining,” Wang said, asking to be identified by just his last name. “New mining projects are under construction. What I can say is that people mine where electricity is cheap.”
Beijing’s lock on crypto mining
Due to Beijing’s 2021 crackdown on the industry, miners shut down their local businesses and fled to markets in North America and Central Asia. U.S. President Donald Trump’s pro-crypto policies and increased trust in the currency, the digital asset reached record highs in October, making mining bitcoin more lucrative.
However, as global risk appetite declines, Bitcoin has dropped around a third from its October peak.
“Chinese policy flexibility emerges when economic incentives are strong in specific regions,” said Patrick Gruhn, CEO of Perpetuals.com, a provider of crypto market infrastructure. “The resurgence of mining activity in China is one of the most important signals the market has seen in years.”
He used industry statistics indicating increased activity to support his claim that “even hints of China’s policy easing could act as a tailwind for bitcoin’s narrative as a global, state-resilient asset,” even though China has not formally loosened restrictions on bitcoin mining.
According to miners and rig builders, bitcoin mining, the energy-intensive process of employing specialised computers to solve challenging riddles to win bitcoins, is particularly active in hinterlands with plenty of power, like Xinjiang.
Industry speaks
Duke Huang, who lives in Sichuan and stopped mining bitcoin a few years ago because of the Chinese government’s ban, reported that several of his pals had lately returned to the industry. “It’s a sensitive area … But people who get cheap electricity are still mining.”
According to a source at a bitcoin mining rig manufacturer, the resurgence was fueled not just by increased bitcoin prices but also by an excess of electricity and processing capacity following over-investment in data centres by certain cash-strapped Chinese local governments.
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