According to miners and industry sources, Bitcoin mining, which was banned in China four years ago, is quietly making a comeback, thanks to cheap electricity and the vigorous development of data centers in some provinces. This could provide support for the demand and price of the world’s largest cryptocurrency.
![图片[1]-Electricity surpluses in Xinjiang and other regions, coupled with a renewed surge in Bitcoin mining in China, are supporting rising prices.-OzABC](https://www.ozabc.com/wp-content/uploads/bitcoin-2008262_1280-624x468-1.jpg)
Reuters reports that China was once the world’s largest cryptocurrency mining nation, but in 2021 Beijing banned all cryptocurrency trading and mining, citing threats to national financial stability and energy conservation. This forced Chinese miners to relocate to North America or Central Asia, and China’s share of the global Bitcoin mining market dropped to zero.
However, the Hashrate Index, which tracks Bitcoin mining power, shows that by the end of October this year, China’s global Bitcoin mining market share had rebounded to 14%, regaining its third-place position. Furthermore, according to estimates from blockchain data and analytics company CryptoQuant, 15% to 20% of global Bitcoin mining capacity is currently operating in China.
The same trend can be seen in the sales of Canaan Inc., the world’s second-largest mining machine manufacturer, in China. According to data submitted by Singapore-based Canaan to the Securities and Futures Commission, the Chinese market’s share of its global revenue has rebounded from 2.8% in 2022 to 30.3% last year; and sources familiar with the matter revealed that it rose above 50% again in the second quarter of this year.
Digital asset prices have seen a strong rally during this period, reaching a record high in October. This buying interest stems from US President Donald Trump’s pro-cryptocurrency policies and declining investor confidence in the US dollar, making mining more attractively rewarding.
A source from a Bitcoin mining machine manufacturer pointed out that, in addition to price factors, some local governments in China previously over-invested in data centers, leading to an oversupply of electricity and computing power. These governments are facing cash shortages, which is also one of the reasons for the return of funds from the mining boom in China.
Miners and mining machine manufacturers have revealed that Bitcoin mining, an extremely energy-intensive activity, is currently particularly active in inland China, such as Xinjiang, where electricity is plentiful.
A man surnamed Wang, who started mining in Xinjiang at the end of last year, said, “Xinjiang has a lot of electricity that can’t be transmitted out, but it can be used to mine cryptocurrency.” He pointed out that there are also some new mining projects under construction in the area. “I can only say that everyone will go to places where electricity is cheap to mine.”
Another man surnamed Huang from Sichuan said that he quit Bitcoin mining a few years ago due to a government ban, but recently some of his friends have started mining again. “This area is sensitive… but people who can get cheap electricity are continuing to mine.”
Patrick Gruhn, CEO of cryptocurrency market infrastructure provider Perpetuals.com, believes that the resurgence of mining activity in China is one of the most important signals for the cryptocurrency market in recent years. He stated that while Beijing has not officially loosened restrictions on Bitcoin mining, policy flexibility often emerges when a region in China experiences strong economic incentives.
Liu Honglin, founder of the Chinese law firm Mankun, also believes that completely eliminating a profitable business is not easy. He believes Beijing will gradually relax its mining-related policies, “because such activities simply cannot be completely stopped.”
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