In the torrent of history, some chapters seem to have been destined long ago, yet they are always replayed in unexpected ways. In 2021, the Chinese government, with great force, completely banned cryptocurrency mining activities due to dual considerations of financial stability and energy security. This ban caused the once-dominant Chinese mining industry, which accounted for half of the global Bitcoin hashing power, to fall silent in an instant, with millions of mining machines turning off their lights overnight, staging an epic 'hash power migration.' However, four years later, a surprising reality is quietly emerging: China's Bitcoin mining activities have not only not disappeared but have instead revived in a secretive and resilient manner, with its hash rate share climbing to the third largest in the world.


This is not only a test of the policy red line but also a complex game woven together by economic incentives, local tacit agreements, and technological realities.


The computing power landscape returns


According to the latest data from the professional analysis agency Hashrate Index as of the end of October 2025, China's share of the total Bitcoin network computing power has strongly rebounded to about 14%, corresponding to a computing power of 145 EH/s. This figure has surpassed Kazakhstan and other previously popular destinations for computing power migration, reclaiming its position as the third-largest mining country globally, only behind the U.S. with a share of 37.8% (approximately 389 EH/s) and Russia in second place at 15.5%.


This is not a baseless speculation. Data from the upstream of the industry chain provides solid evidence for this. The financial report of Canaan, the world's second-largest mining machine manufacturer, shows a dramatic change in its revenue proportion from the Chinese mainland market: from a low of 2.2% after the 2022 ban, it surged to 30.3% in 2024, and even surpassed 50% in the second quarter of 2025. Chinese buyers have re-emerged as the dominant force in the mining machine market, undeniably confirming the vigorous recovery of underground mining activities.


This quiet return is no accident; it is the result of three core factors working together, forming an irresistible economic pull.


I. Irresistible cheap electricity


The essence of Bitcoin mining is a game of energy consumption, and electricity costs are the lifeline that determines miners' survival. The western regions of China, especially Xinjiang, Sichuan, and Inner Mongolia, have extremely rich and cheap hydropower, wind power, and photovoltaic resources. Due to limits on grid transmission capacity and local consumption capabilities, a large amount of electricity is wasted during peak water or wind and solar generation periods, leading to the so-called phenomena of 'abandoned water', 'abandoned wind', and 'abandoned light'.


For miners, the industrial electricity price in these regions is as low as 0.2 to 0.35 yuan per kilowatt-hour, far below the international average, creating an unparalleled cost advantage. A miner from Sichuan vividly described: "If you don't mine, it's a waste; otherwise, the electricity will just flow away for nothing." The existence of this 'stranded energy' provides the most fertile ground for underground mining. As long as there is profit to be made, capital and computing power will seep into every existing low-lying area like water.


II. The 'unexpected assist' of AI data centers


Over the past few years, driven by the wave of artificial intelligence, various regions in China have initiated a frenzy of building AI and cloud computing data centers. However, this over-investment has led to a large number of idle server rooms and electricity quotas. For some local governments facing fiscal pressure, this idle 'new infrastructure' has become a burden.


Thus, an unspoken tacit understanding has formed. Locals 'close one eye and open the other', tacitly allowing these facilities with legal electricity permits and physical space to shift their business to energy-intensive Bitcoin mining. This not only effectively digests excess electricity resources but also brings tax revenue and employment to the locals, revitalizing idle assets. In a sense, the AI boom inadvertently provides a perfect 'disguise' and ready-made infrastructure for the return of Bitcoin mining.


III. The 'golden temptation' of soaring Bitcoin prices


Economic incentives are always the most primitive driving force. In 2025, Bitcoin prices surged to a historic high of $126,000. Even after a subsequent decline, maintaining a range of $80,000 to $90,000 remains extremely profitable for miners with efficient mining machines and cheap electricity. Estimates show that at that price level, each EH/s of computing power could still earn $30 to $40 daily, far exceeding electricity costs. This enormous profit margin has attracted a large amount of capital and experienced old miners back to the table, willing to take on policy risks for this 'underground gold rush.'


U.S. 'energy commandos'


As we focus on the recovery of domestic mining in China, a more historically ironic parallel story is unfolding across the ocean. In 2021, what was 'zeroed out' was not just machines and computing power, but a group of 'energy commandos' who had the deepest understanding of energy management and large-scale computing power deployment globally.


These expelled Chinese mining companies and engineers, carrying their skills honed in the power struggles along the Dadu River in Sichuan, have flooded into the United States, especially Texas, which has an independent grid and a free electricity market. They quickly upgraded their connections with local power plant managers to secure low-cost electricity into high-frequency trading algorithms that adapt to Texas's real-time electricity price fluctuations. Their automated programs can 'gobble up' electricity to relieve the grid when prices are negative (a common occurrence during Texas's wind power surplus) and instantly cut loads to 'sell electricity' back to the grid when prices soar, showcasing an arbitrage capability that astonishes local U.S. electricity traders.


More importantly, they brought to the U.S. the rapid infrastructure capabilities of 'modular, containerized, and minimalist heat dissipation' honed in China, compressing the construction cycle of data centers from 2-3 years to 3-6 months.


Today, as the AI revolution ignited by ChatGPT has left American tech giants facing an unprecedented power gap, they are horrified to find that the waiting time for powering a new AI data center can last for several years. Those 'former Bitcoin mining companies' holding a large number of grid connection permits and knowing how to quickly deploy high-density computing facilities have suddenly become a lifeline. American AI giants are signing agreements worth billions of dollars with these companies to rent their electricity and facilities to train AI models.


History has played a huge joke: China, for energy security and financial sovereignty, actively stripped away the mining industry; yet this portion of 'excess capacity' and 'backward technology' unexpectedly became the most scarce and valuable 'immediate combat power' and 'stabilizing cornerstone' in its main competitor AI strategy.


Sword of Damocles


Although underground mining activities are thriving, the sword of Damocles hanging over them has never moved. China's crypto ban has not been lifted, meaning all mining activities remain in a gray area. The tragedy of 'all mining machines turned off overnight' in Sichuan in 2021 is still vivid, and the risks of sudden power outages, hefty fines, and even criminal liability could strike at any time.


Additionally, as China's 2026 'dual carbon' target deadline approaches, if the central government takes strong action to fulfill its environmental commitments, local 'protective umbrellas' may instantly lose effectiveness. At that time, today's prosperity may again turn to ashes.


Analysts generally believe that as long as Bitcoin prices remain high and local fiscal pressures and energy surplus issues persist, this regulatory and market 'cat-and-mouse game' will continue. The 'phoenix rebirth' of Bitcoin mining in China has not only profoundly changed the global computing power landscape but also vividly illustrates a principle: when the economic pull is strong enough, even the most solid policy red lines may be quietly shifted and blurred. The future direction—whether it will be a renewed crackdown or gradual tacit acceptance—is still a puzzle full of variables.