Bitcoin mining is experiencing a resurgence in China, despite being banned four years ago. According to a Reuters report, individual and corporate miners are taking advantage of cheap electricity and a data center boom in energy-rich provinces. This development has led to China reclaiming its position as a major hub for bitcoin mining, with CryptoQuant estimating that 15%-20% of global bitcoin mining capacity currently operates in China.
China had previously been the world’s largest crypto mining country until the government banned all cryptocurrency trading and mining in 2021, citing threats to financial stability and energy conservation. However, the country has since crept back to third place in terms of global bitcoin mining market share, with a 14% share as of October, according to Hashrate Index.
The rebound in bitcoin mining can be attributed to various factors, including the availability of cheap electricity, a glut of computing power, and higher bitcoin prices. Additionally, the subtle shift in China’s digital asset posture has also contributed to the growth of bitcoin mining in the country. Canaan, the world’s second-biggest bitcoin mining machine maker, has seen a significant increase in sales in China, with the country accounting for 30.3% of its global revenues last year, up from 2.8% in 2022.
The resurgence of bitcoin mining in China has significant implications for the global cryptocurrency market. The increased mining activity could act as a demand and price support for bitcoin, which has been experiencing a downturn in recent months. Furthermore, the development suggests that China may be softening its stance on digital currencies, which could have far-reaching consequences for the global financial landscape.
The Chinese government’s attitude towards digital coins appears to be shifting, with Hong Kong’s stablecoin bill taking effect in August, enabling the city to compete with the US in fostering a regulated market for fiat-currency-backed cryptocurrencies. China is also considering allowing the use of yuan-backed stablecoins to boost the wider adoption of its currency globally.
The rebound in bitcoin mining in China is a significant development that underscores the complexities of the global cryptocurrency market. As the market continues to evolve, it is likely that China will play an increasingly important role in shaping the future of digital currencies. With the country’s rich energy resources and growing demand for computing power, it is likely that bitcoin mining will continue to thrive in China, despite the official ban.