China: Electricity Too Cheap Revives the Bitcoin Mining Industry

Just four years ago, China brushed aside any activity related to bitcoin. The Middle Kingdom abruptly banned mining and tried to erase all traces of this parallel economy. Yet, recent figures tell a different story. To everyone’s surprise, China is back among the top three globally. What happened? Between energy needs, digital strategy, and geopolitical interests, the resurgence of crypto mining raises real questions.

Mines under the radar: when bitcoin hides in data centers

Officially, bitcoin mining has been banned in China since 2021. Yet, the country, a fan of the digital yuan , now holds between 14% and 20% of the global hashrate, according to data from Hashrate Index and CryptoQuant. A meteoric comeback for an industry supposed to be eradicated.

The secret? Cheap energy, hard to export, especially in regions like Xinjiang and Sichuan. These provinces have colossal energy surpluses, discreetly used to power clandestine mining farms.

Wang, a miner based in Urumqi, explains it bluntly:

A large part of the energy cannot be transmitted outside Xinjiang, so we consume it via crypto mining… New mining projects are under construction. All I can say is that people mine where electricity is cheap.

Meanwhile, the industry adapts. Rig manufacturers like Canaan have seen their local sales skyrocket: from 2.8% to over 50% in just one year. The reason? The rise of the bitcoin price and commercial uncertainties with the United States.

Bitcoin, but not only: crypto keeps mining under the ash

This mining revival is not limited to bitcoin. Projects related to Ethereum, Litecoin, and even stablecoins are emerging in the shadows. Despite the official narrative, the Chinese crypto market remains active, ingenious, and resilient.

Why this discreet turnaround? Because Beijing seems to opt for a pragmatic tolerance strategy. Hong Kong recently legalized a framework for stablecoins . Mainland China, on its side, is studying the use of stablecoins backed by the yuan, in a logic of monetary sovereignty.

The signals are clear, even if unspoken. Patrick Gruhn, CEO of Perpetuals.com, does not mince his words:

The resurgence of mining activity in China is one of the most important signals the market has seen in years. 

Discussions are advancing, activities are multiplying, and investors are following.

From ban to tolerance: when the ban becomes optional

China is not an isolated case. Several countries have tried to ban crypto before backtracking. In Russia, India, Nigeria, or even Zimbabwe, bans have turned into regulations. Why? Because banning is no longer enough.

China follows this ambivalent logic. It bans on paper but tolerates in fact, where it benefits local economies. Meanwhile, the global hashrate reaches 1043 EH/s, despite a hashprice drop to $35 per PH/s. Margins are tighter, but the activity remains profitable.

Miners know how to adapt, even under pressure. Equipment is mobile, data centers proliferate, and demand for cryptos remains steady. Result: China becomes a giant again… without saying so.

Key numbers to remember

• 14 to 20% of the global hashrate is currently located in China;
• Domestic sales of Canaan rigs rose from 2.8% to over 50%;
• The global hashrate reaches 1043 EH/s, but hashprice falls to $35;
• Beijing is considering yuan-backed stablecoins to counter the dollar;
• Several former banned countries like Russia or Zimbabwe now regulate the crypto industry.

While the crypto industry develops quietly, the Chinese economy is going through a turbulent phase . Private investments are falling, margins are shrinking, and growth is slowing. Faced with this reality, Beijing might still turn a blind eye to miners, as long as electricity remains cheap… and the positive spillovers continue.