What is driving China’s Bitcoin activity after four years of crackdown?

A crackdown in 2021, from dominance to banning

Prior to 2021, China held a significant share of the global Bitcoin market (BTC) mining. According to the Cambridge Bitcoin Electricity Consumption Index, Chinese miners will produce about 65% the computing power of Bitcoin in the world by 2020.

By 2021, China will be able to end the use of benzene in its country. mining activity. They cited fears about the financial risk, capital flows and electricity consumption. People’s Bank of China, in September of 2021 declared that cryptocurrency transactions are illegal. They also confirmed a nationwide mining ban.

As a result, the global hashrate dropped sharply as many Chinese mines closed down or relocated their equipment in countries like Russia, Kazakhstan, and USA.

Despite China banning crypto mining, the global use of electricity by BTC miners has continued to increase. Rapid growth was seen in other nations, which offset the drop in China. Electricity consumption per year for Bitcoin mining increased by 91 terawatt hours (TWh) from 2021 to 121.13 tWh.

Recovery of mines in the period 2024-2025

In various areas of China, mining operations are now being carried out again. However, they are much smaller and more discreet than in the past.

Hashrate Index Data reported By October 2025 China is expected to account for around 14% global Bitcoin mining. It will be the third biggest mining country, after the US, and Kazakhstan. The analysts at CryptoQuant, a blockchain research company, go even further. estimating Between 15% and 20% of Bitcoins are mined in China.

Canaan’s fast-rebounding sale of Bitcoin miner machines is another sign of Bitcoin mining resurging in China. Canaan accounted for just 2.8% of its revenue in 2022. In 2023 the number had increased to 30% and, according to industry sources, it was over 50% by the second quarter 2025.

Did You Know? Bitcoin is protected by miners who compete to solve cryptographic problems, but no one entity has ever been able to control it for long. Its resilience to economic and political disruptions is demonstrated by its geographic shifting from China to Central Asia to the US.

The reasons behind a resurgence in mining activities in China

A Reuters reportIn the last two or three years, there has been a resurgence of mining in Xinjiang. Xinjiang, a province with abundant energy resources, has been a supporter of mining. Many of its excess energy can’t be transported out of the area, and is therefore used for cryptocurrency mining.

Most inland China regions produce more energy than they are able to efficiently transfer to coastal cities. In provinces like Xinjiang or Sichuan the surplus electricity generated mainly by coal is otherwise wasted. This low-cost electricity or surplus power can be used to operate mining equipment.

In recent years, local governments also constructed large data centres. Owners can offer space and electricity to Bitcoin miners when demand is less than anticipated. The rising Bitcoin price since 2024 has further increased the profitability of these bitcoin miners.

The combination of excessive data center capacity and rising Bitcoin prices could have provided the perfect environment for the revival of cryptocurrency mining.

Bitcoin mining is increasing due to the factors listed below:

• Power that is cheap or not used enough: The surplus power in provinces like Xinjiang or Sichuan can be mined.

• Surplus computing infrastructure: Data centers that are over-capacity actively seek clients who will make the most of it.

• Bitcoin Price Environment: Mining profitability is improved by a high Bitcoin price in part due to favorable policy changes regarding cryptocurrency in the US.

Concentration of mining activities in areas with high power availability:

• Xinjiang has abundant coal and wind energy, as well as established industrial facilities.

• Sichuan is known for its low-cost hydropower in the rainy seasons.

• There are other provinces in the west with favorable local conditions and surplus energy.

Did You Know? Every four-years Bitcoin undergoes a halving This reduces miner’s rewards by half. The scarcity system mimics the gold mining process and can often cause major market cycles, while shaping supply dynamics.

China’s attitude towards digital assets is changing

China’s digital asset policy is evolving from one that rejects all digital assets to one which accepts them selectively and strategically. Beijing has shown greater tolerance for a carefully-regulated digital infrastructure.

Hong Kong’s licensing framework for stablecoins, which came into effect in August of 2025, reflects a broader perspective. Hong Kong, although designated as an Special Administrative Region (SAR), is part of China.

Authorities on the Chinese mainland are looking at yuan stablecoins to help increase international usage of the Renminbi. China has also been advancing rapidly its digital currency issued by the central bank, e-CNY. It is being integrated into everyday payments, as well as cross-border and public service pilots.

This shows that China is moving away from a total ban to a controlled experiment. The operation of digital assets may be permitted if they support national economic and financial goals.