Synopsis: China has quietly rebounded to hold about 14% of global bitcoin mining, becoming the world’s third-largest hub. The comeback is driven by cheap electricity and expanded underground mining, especially in Xinjiang despite the 2021 ban.
China has made a surprising comeback in bitcoin mining, now holding about 14% of the global market. This rise places China as the third-largest bitcoin mining hub worldwide, behind the United States and Russia. Despite a government ban in 2021, underground mining has expanded, driven by low electricity prices and extra data center capacity, especially in provinces like Xinjiang. The rebound shows the resilience of miners and the economic pull of cheap power in China.
Underground Mining Thrives Despite Ban
China banned all cryptocurrency mining and trading in 2021, aiming to protect financial stability and reduce energy consumption. However, miners have adapted by moving operations underground.
In provinces such as Xinjiang and Sichuan, cheap electricity from coal, hydro, and wind powers data centers and mining rigs quietly. These facilities often resemble tech operations, helping miners avoid detection. Sources estimate about 15-20% of global bitcoin mining now occurs in China underground.
Mining rig sales support this trend. Canaan, a major mining equipment manufacturer, noted a sharp rebound in domestic sales. By 2025, over half of Canaan’s revenue comes from China, up from under 3% in 2022. This reflects miners buying new machines to restart or expand underground projects. The softer local enforcement and hints of more flexible digital asset policies create a fertile ground for this resurgence.
Factors Powering China’s Return
Several key factors explain China’s mining comeback. First, regions like Xinjiang boast some of the cheapest electricity worldwide, often below 5 cents per kilowatt-hour, significantly undercutting global averages. This power surplus, originally meant for AI and cloud services, is redirected to mining without raising alarms. Second, China’s vast data center infrastructure offers cooling and space for mining rigs, further reducing costs.
Additionally, underground miners have become adept at operating in regulatory gray zones. Some provinces encourage “green” data centers without banning crypto mining explicitly. Local governments also balance promoting jobs and tech growth against strict policies, allowing mining to persist. These economic incentives outweigh the risks for many operators.
Bitcoin Mining Profitability Falls
Despite China’s comeback, miners face financial pressure globally. Bitcoin’s hashprice a measure of mining revenue per unit of computing power dropped to its lowest point ever, around $34 per petahash per second. This decline is due to a bitcoin price fall of over 30% from its October peak and very low transaction fees. Mining difficulty has also reached record highs, requiring more power and costs.
For Chinese miners, cheap electricity provides some cushion, but older machines struggle to stay profitable. With hashprice falling below breakeven levels for many rigs, some mining operations worldwide have already started shutting down. Nonetheless, resilient miners use strategies like locking in prices via futures markets to manage revenue risks.
Broader Impact and Outlook
China’s quiet return disrupts expectations from the 2021 ban, showing how strong economic incentives and flexible enforcement can overcome regulatory crackdowns. It also shifts the global bitcoin mining landscape, offering a counterbalance to dominance by U.S. miners in Texas and Georgia. This diversification may lead to more stable mining network dynamics worldwide.
Looking ahead, bitcoin miners and equipment makers will watch for policy changes and market price rebounds. Experts anticipate hashprice stabilization if bitcoin recovers above $100,000. Meanwhile, China’s mining revival highlights persistent tensions between government control and technological innovation, showing the complex future of digital currencies in major economies.
This robust resurgence reminds us that banning decentralized currencies outright is a tricky business. Economic realities of cheap power and demand for mining rigs keep China firmly part of the bitcoin story again. Such underground mining activity is quietly shaping the future of global cryptocurrency.
Written By Fazal Ul Vahab C H