China’s underground bitcoin mining sector is making a quiet comeback, supported by cheap electricity, growing miner demand, and signs of a more flexible regulatory environment in some provinces.
After nearly vanishing from the global map following the 2021 crackdown, China has returned as the third-largest bitcoin mining hub, accounting for about 14% of global hashrate as of October, according to Hashrate Index. The resurgence is concentrated in regions with abundant low-cost power, particularly Xinjiang, where surplus electricity and rapid data-center development have created favorable conditions for covert operations.
Miners told Reuters that excess energy in Xinjiang and Sichuan is encouraging new underground projects, with some former operators returning to the sector. CryptoQuant estimates that 15–20% of global mining capacity now originates in China.
Hardware demand is also rebounding. Mining equipment manufacturer Canaan has seen strong domestic sales, boosted by rising bitcoin prices and uncertainty over U.S. tariffs that have slowed overseas orders.
While the Chinese government has not officially reversed its crypto ban, its stance appears to be softening. Hong Kong’s work on stablecoin regulations and discussions around yuan-backed stablecoins point to a more accommodative approach to digital assets.
Hashprice Hits Record Lows
Despite increased activity, miner profitability is under pressure. Bitcoin hashprice—the expected revenue per unit of hashrate—fell to an all-time low of $34.2 per PH/s on Friday, according to Luxor.
Hashprice is influenced by bitcoin’s price, network difficulty, block rewards, and transaction fees. It rises when prices or fees increase and falls when mining difficulty climbs.
Bitcoin’s price is down more than 30% since its October peak, transaction fees remain subdued, and network hashrate is slightly above one zettahash (about 10% below recent highs), pushing miner revenue to record lows. The next difficulty adjustment, expected Wednesday, is projected to fall by just over 2%.
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