China is Rising Again in Bitcoin Mining

The recent fluctuations in Bitcoin prices have attracted investor attention, increasing interest in the cryptocurrency market. Especially, Bitcoin mining in China is showing a significant recovery despite the ban imposed four years ago.

Data compiled by Reuters reveals that China's global hashrate share in Bitcoin mining has increased to 14%, regaining its position as the third-largest player. After the ban implemented in 2021, the country's mining activities had dropped to zero; however, its recent resurgence is seen as a sign of a significant transformation in the sector.

China had maintained its global dominance in Bitcoin mining for years; however, the Beijing government imposed comprehensive bans on the sector four years ago. Nevertheless, both individual and institutional miners have resumed activities in energy surplus regions such as Xinjiang and Sichuan, which is noteworthy. According to Hashrate Index data, it has been confirmed that China has returned to its previous position with a 14% share of global Bitcoin production as of last month.

This comeback has not been limited to the resumption of local miners; also, the rapid increase in sales of equipment manufacturers like Canaan in China has been another indicator supporting this trend. Some miners have stated that when excess electricity in the region cannot be utilized, this energy is being used for Bitcoin mining.

In fact, although China's official stance on the mining ban has not changed, the easing of economic conditions in the region is noteworthy. Excess energy supply, overinvestment in data centers, and periodic increases in Bitcoin prices have made mining economics attractive again. Additionally, former U.S. President Donald Trump’s crypto-friendly policies have been another significant factor in increasing global interest.

Industry representatives indicate that these signs of turnaround could lead to significant breaks in both the demand side and the narrative side for Bitcoin. Some experts suggest that "the resurgence in China is an unprecedented signal for the market."

Particularly, regions with energy surpluses such as Xinjiang and Sichuan are reported to offer ideal conditions for mining. Local miners report that those who can find low-cost electricity have quickly returned to the system. Furthermore, the excessive expansion of data center investments provides not only cheap computing power but also generates surplus energy, making mining a natural solution.

Although China has yet to officially lift its mining ban, the increasing activity in the region continues to keep the situation in a gray area, reshaping the global distribution of mining and reinstating China at the table in terms of Bitcoin mining.