Bitcoin mining picks up in China

China had been the world’s biggest crypto mining country until Beijing banned all cryptocurrency trading and mining in 2021, citing threats to the country’s financial stability and energy conservation

Bitcoin mining is quietly staging a comeback in China despite being banned four years ago, as individual and corporate miners exploit cheap electricity and a data centre boom in some energy-rich provinces, according to miners and industry data.

China had been the world’s biggest crypto mining country until Beijing banned all cryptocurrency trading and mining in 2021, citing threats to the country’s financial stability and energy conservation.

After having seen its global bitcoin mining market share slump to zero as a result of the ban, China crept back to third place with a 14% share at the end of October, according to Hashrate Index, which tracks bitcoin mining activities.

The resurgence in bitcoin mining, which has also been corroborated by rig maker Canaan Inc’s fast-rebounding sales in China, could act as a demand and price support for the world’s largest cryptocurrency.

Beijing’s crackdown on the sector in 2021 led to miners shutting down local operations and shifting to overseas markets such as North America and Central Asia.

The rebound in bitcoin mining coincides with the digital asset hitting record highs in October, and growing distrust toward the dollar, making crypto mining more rewarding.

The cryptocurrency, however, is down roughly a third from its October peak as global risk appetite wanes.

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.

China has not officially relaxed bitcoin mining curbs, but even hints of China’s policy easing could act as a tailwind for bitcoin’s narrative as a global, state-resilient asset, he said, pointing to industry data signalling renewed activity.