Key Points
- In 2021, China outlawed cryptocurrency mining and all related transactions, citing concerns over financial crime and systemic instability.
- The People’s Bank of China led the regulatory charge, declaring crypto activities illegal and incompatible with national financial sovereignty.
- Contrary to official narratives, mining never fully disappeared; by Q4 2025, China accounted for 14.05% of Bitcoin’s global hashrate—roughly 145 exahashes per second.
- China now ranks third globally in Bitcoin mining, behind only the United States and Russia, with much of the activity believed to be concentrated in Xinjiang.
- Xinjiang’s geographic isolation and access to low-cost energy have enabled covert mining operations to persist despite legal risks.
- Bitcoin’s price recently hovered near $111,000, with the global hashrate surpassing 1,137 EH/s, reflecting strong miner confidence and network resilience.
The Regulatory Crackdown of 2021
China’s formal rejection of cryptocurrency reached its zenith in 2021, when authorities rolled out one of the most aggressive anti-crypto policies in the world. The government framed its actions as necessary to shield citizens from speculative excess and to prevent digital assets from undermining the yuan’s dominance. Officials expressed alarm over the growing use of crypto in money laundering, tax evasion, and other illicit financial schemes. These concerns were not entirely unfounded—decentralized finance had begun to operate in gray zones that eluded traditional oversight, creating friction with China’s tightly controlled financial architecture.
The People’s Bank of China moved swiftly, first targeting mining operations and then banning all forms of cryptocurrency transactions. The logic was straightforward: if individuals could not legally buy, sell, or trade digital assets, demand would evaporate, and mining would become economically unviable. This two-pronged strategy aimed to sever both the supply and demand sides of the crypto ecosystem within Chinese borders. At the time, many observers assumed this would effectively erase China’s role in the global Bitcoin network, given its historical dominance in hash power prior to the ban.
The Persistence of Underground Mining
Reality, however, proved more complex. Despite stringent enforcement and high-profile raids, mining never vanished entirely. By the final quarter of 2025, data revealed that China still contributed 14.05% of Bitcoin’s total computational power—equivalent to approximately 145 exahashes per second. This figure marked a slight increase from the previous quarter and positioned China as the third-largest mining jurisdiction worldwide, trailing only the United States and Russia. The resilience of these operations underscores a critical truth: regulatory bans can suppress but rarely eliminate deeply entrenched economic behaviors, especially when profit incentives remain strong.
Industry analysts point to Xinjiang as the epicenter of this underground resurgence. The region’s vast deserts, sparse population, and surplus of subsidized energy—particularly from coal and hydroelectric sources—create ideal conditions for energy-intensive mining. Operators there have adapted by running smaller, dispersed facilities and leveraging local power grids during off-peak hours to avoid detection. Supply chain intelligence suggests that new ASIC hardware continues to flow into the region, often through informal channels, enabling miners to upgrade equipment despite export controls and legal prohibitions.
Bitcoin’s Resilience and the Global Hashrate Landscape
While China grapples with its internal contradictions regarding crypto, the Bitcoin network as a whole has grown stronger. As of late 2025, the global hashrate exceeded 1,137 exahashes per second, a testament to the network’s expanding security and the confidence of miners worldwide. This metric reflects not just raw computing power but also the collective belief in Bitcoin’s long-term viability. Miners invest heavily in infrastructure, electricity, and maintenance only when they anticipate sustained profitability—a signal that market participants remain optimistic despite regulatory headwinds in key regions.
At the same time, Bitcoin’s market price has climbed to around $111,000, reflecting renewed institutional interest and macroeconomic factors such as inflation hedging and digital scarcity. The correlation between price and hashrate remains strong: as rewards retain value, more miners join or expand operations, further decentralizing and fortifying the network. China’s continued, albeit covert, participation adds an unexpected layer to this dynamic—demonstrating that even nations hostile to crypto cannot fully disengage from its gravitational pull.
Conclusion
China’s 2021 ban on cryptocurrency was a bold attempt to assert control over financial innovation and protect its monetary sovereignty. Yet the persistence of mining activity—now accounting for over 14% of Bitcoin’s global hashrate—reveals the limits of top-down prohibition in a globally interconnected digital economy. Geographic advantages, economic incentives, and technological adaptability have allowed operators to circumvent restrictions, quietly sustaining China’s role in the Bitcoin ecosystem. Far from erasing its influence, the crackdown has merely driven it underground, where it continues to shape the network’s evolution in ways that defy official policy. This paradox highlights a broader truth: in the age of decentralized systems, regulation alone cannot extinguish participation—it can only redirect it.
