Introduction to China’s Crypto Conundrum
China’s share of worldwide Bitcoin mining has quietly climbed back to twenty% despite a 2021 nationwide ban. The country is now the world’s third-largest Bitcoin mining hub again. China joins several countries that attempted blanket crypto bans only to reverse course or regulate after enforcement proved ineffective.
The Rise and Fall of Crypto Bans
When China outlawed Bitcoin (BTC) mining in mid-2021, the federal government expected the industry would disappear overnight. For a brief moment, it did. Hashrate collapsed to almost zero. Mining farms were dismantled. Operators fled to Kazakhstan, Russia, and the United States. However, 4 years later, the map tells a distinct story: China is back and is already among the many top-ranking crypto mining hubs on the earth.
The Resurgence of Underground Mining
A quiet resurgence of underground Bitcoin mining—largely concentrated in regions with low cost, abundant electricity—has lifted China back into the highest three crypto mining hubs globally, in accordance with latest reporting from Reuters and network estimates from CryptoQuant. Current figures suggest Chinese crypto miners now contribute as much as 14-20% of the entire Bitcoin hashrate. Industry sources and latest facility builds point to a growing return of crypto miners to Xinjiang and Sichuan, regions historically known for excess hydropower and stranded energy.
A Global Phenomenon
China’s failed try and wipe out Bitcoin mining is hardly unique. Over the past decade, several countries have tried to outlaw crypto, only to reverse course once they found bans are difficult to implement and even harder to keep up. Russia briefly flirted with a full crypto ban in 2022, targeting mining, trading, and payments. The proposal collapsed inside weeks as the federal government decided regulation—not prohibition—was more practical. Today, Russia has legalized crypto mining and even permits using cryptocurrency for international trade.
Case Studies: Countries That Lifted Their Crypto Bans
- Zimbabwe: In May 2018, the Reserve Bank of Zimbabwe banned all banks and financial institutions from processing payments or trading in cryptocurrencies. The ban was swiftly lifted later that month by a High Court ruling, which deemed it illegal and restored banking access for crypto firms.
- Bolivia: The Central Bank of Bolivia issued Resolution No. 044 in 2014, banning Bitcoin and any unregulated foreign exchange. This was reinforced in December 2020 with one other resolution prohibiting banks from crypto dealings. The ban was fully lifted in June 2024 when the BCB authorized financial institutions to process crypto transactions.
- India: In April 2018, the Reserve Bank of India issued a circular prohibiting banks and controlled financial entities from providing services to cryptocurrency businesses. The ban was lifted in March 2020 when the Supreme Court of India ruled it unconstitutional, allowing banks to resume services for crypto exchanges.
- Nigeria: The Central Bank of Nigeria directed banks to shut accounts of crypto traders and prohibit transactions in February 2021. The ban was lifted in December 2023, with the CBN authorizing banks to facilitate crypto transactions via licensed Virtual Asset Service Providers (VASPs).
Structural Realities
China’s renewed hashrate illustrates several structural realities:
- Cheap electricity is tough to manage. Regions like Xinjiang often produce more energy than they’ll distribute and eat.
- Mining hardware is portable and simply concealed. Small-scale crypto miners can operate in industrial units, warehouses, or rural areas.
- Bitcoin’s incentives remain powerful. With prices—even after recent downturns—still lucrative, crypto miners find ways to survive.
- Global demand hasn’t slowed. As Bitcoin matures, hashpower becomes more geographically diversified and resilient.
Conclusion
Despite Beijing’s continued skepticism, crypto miners have found respiratory room within the cracks of the energy grid. The story of China’s crypto ban and its failure serves as a testament to the resilience of the cryptocurrency market and the challenges governments face in regulating decentralized digital assets. As the world continues to navigate the complexities of cryptocurrency regulation, one thing is obvious: blanket bans should not the answer. Instead, a balanced approach that considers the economic, social, and technological implications of cryptocurrency is vital for fostering a healthy and thriving crypto ecosystem.
