China's Bitcoin Mining Sector Roars Back: How Energy Abundance Fuels a 4-Year Recovery

The 2021 Prohibition and Its Global Aftermath

For nearly a decade, China dominated the global Bitcoin mining landscape. In 2020, Chinese mining operations controlled approximately 65% of the world’s total Bitcoin hash power, making the nation the undisputed center of cryptocurrency mining activity. This dominance came to an abrupt halt in 2021 when the Chinese government implemented sweeping restrictions on the industry.

The crackdown stemmed from mounting concerns about financial stability, capital outflows, and the substantial electricity demands of mining farms. The People’s Bank of China took definitive action in September 2021, officially classifying all cryptocurrency trading as illegal and imposing a complete prohibition on mining operations nationwide. The consequences were immediate and dramatic—Chinese miners either shut down their operations or exported their equipment to alternative locations including the United States, Kazakhstan, and Russia.

The Global Mining Landscape Post-Prohibition

Contrary to expectations that China’s exit would cripple Bitcoin mining, the global industry demonstrated remarkable adaptability. The worldwide electricity consumption for Bitcoin mining continued its upward trajectory throughout the period. Energy usage surged from 89 terawatt-hours (TWh) in 2021 to approximately 121.13 TWh by 2023, indicating that mining operations simply redistributed themselves across more hospitable jurisdictions rather than disappearing entirely.

The Unexpected Resurgence: Mining Returns to China

Four years after the prohibition, recent market data reveals an astonishing reversal. As of October 2025, Bitcoin mining has quietly resumed operations within China’s borders. According to the Hashrate Index, the nation now accounts for roughly 14% of the global Bitcoin mining hash power, positioning China as the world’s third-largest mining jurisdiction behind the United States and Kazakhstan. Independent analysis from CryptoQuant suggests the actual proportion could range between 15% and 20%, though official figures remain opaque.

This resurgence is strikingly evident in the performance of domestic hardware manufacturers. Canaan, a leading producer of Bitcoin ASIC miners, has experienced a dramatic shift in its revenue composition. The company’s domestic sales share plummeted to just 2.8% of total revenue in 2022 following the ban, but recovered to over 30% throughout 2023. Industry analysts now estimate that Canaan’s Chinese revenue exceeded 50% of total quarterly earnings by the second quarter of 2025—a remarkable turnaround that signals substantial renewed demand for mining infrastructure.

Why Energy-Rich Regions Are Leading the Charge

The geographic clustering of this mining recovery tells an illuminating story about energy economics and industrial opportunity. Two provinces emerge as primary hubs: Xinjiang and Sichuan.

Xinjiang’s Advantage: This northwestern region possesses vast reserves of coal and wind energy capacity. Electricity generation frequently exceeds the transmission infrastructure’s capacity to distribute power eastward to coastal urban centers, creating a persistent surplus. For energy-intensive industries like Bitcoin mining, this surplus translates into abundant and chronically underutilized power—essentially, cheap electricity that would otherwise go to waste. Miners capitalize on this inefficiency by relocating operations to where the power already exists.

Sichuan’s Hydroelectric Edge: During the rainy season, this southwestern province generates abundant hydroelectric power at exceptionally low costs. The temporal mismatch between seasonal hydroelectric abundance and year-round industrial demand creates seasonal windows of opportunity for energy-dependent enterprises like mining farms. Local governments have further amplified this trend by developing massive data center complexes designed to serve cloud computing and AI workloads. During periods of reduced computing demand, these facilities rent surplus capacity and power to mining operators, transforming underutilized infrastructure into profit-generating assets.

The Perfect Storm: Price, Policy, and Abundance

Three converging factors have synchronized to enable this renaissance:

Rising Bitcoin Valuations: Since 2024, Bitcoin has appreciated substantially, improving mining profitability margins. As of January 2026, Bitcoin trades near $90.49K, rendering mining operations economically viable even in moderately expensive electricity markets.

Surplus Energy Infrastructure: Regional governments have invested heavily in power generation and data center capacity designed for local development, but these investments frequently outpace regional demand, creating pools of available resources.

Regulatory Ambiguity: Rather than enforcing the 2021 prohibition with the same rigor as 2021-2023, local authorities appear to have adopted a more pragmatic stance, particularly in resource-rich provinces where mining represents underutilized asset monetization rather than financial instability.

The Halving Cycle and Long-Term Dynamics

Understanding Bitcoin’s structural mechanisms provides context for mining’s cyclical nature. Bitcoin undergoes a programmatic halving event every four years, during which miner block rewards automatically reduce by 50%. The next halving approaches, and miners are positioning accordingly. This built-in scarcity mechanism fundamentally shapes industry profitability cycles and supply dynamics, forcing the sector to continuously innovate and relocate toward the most energy-efficient jurisdictions.

China’s mining resurgence exemplifies how global industries adapt to regulatory constraints and economic incentives. Despite prohibition, the convergence of cheap energy, underutilized infrastructure, and rising asset prices has quietly rebuilt Chinese mining capacity into a significant global force—a testament to the industry’s resilience and the immutable logic of energy economics.