Despite the ban on Bitcoin 
$76,429 mining in 2021, China is witnessing a resurgence in this field. As reported by Reuters, the country has ascended to the third position globally as of October, contributing approximately 14% of the global hash rate. This revival is backed by affordable electricity, excess energy production, and increased data center capacity. Specifically, the low-cost infrastructure in Xinjiang and Sichuan has made underground mining attractive once more.
The Shadowy Comeback of Mining in China
Data from Hashrate Index confirms that China is reasserting its presence on the global mining stage. Miners speaking to Reuters have shared that companies operating in regions with energy surpluses are covertly restarting their operations. According to CryptoQuant data, between 15% and 20% of the world’s hash rate is now emanating from China. This increase in hash rate indicates that the sector could not be entirely halted despite the bans, and low electricity costs continue to play a significant role.
Additionally, there appears to be a noticeable softening in the government’s policy stance. Hong Kong’s new stablecoin regulation and discussions on yuan-backed cryptocurrencies are perceived as China adopting a more flexible outlook toward cryptocurrencies. Although the ban is officially in effect, loopholes and regional disparities have paved the way for the revival of mining activities.
Challenging Times for Miners Due to Falling Hashprice
Canaan, a manufacturer of mining equipment, has revealed that domestic sales are rapidly increasing, particularly with the rebound in Bitcoin’s price strengthening local demand. Uncertainties in the U.S. trade environment have weakened Canaan’s overseas sales, contributing to the expansion of local miners’ operations. However, this recovery has not translated into a parallel increase in miners’ revenue.
According to Luxor data, the Bitcoin hashprice, indicating miners’ revenue per unit of hash power, has declined to $34.2 per PetaHash, reaching an all-time low. The 30% drop in Bitcoin’s price, coupled with low transaction fees and high network difficulty, continues to exert pressure on revenues. While the network’s hash rate hovers at a zettahash level, it’s anticipated that the upcoming difficulty adjustment could result in a roughly 2% decrease.
