China’s underground bitcoin mining sector is making a comeback, driven by cheap electricity, rising miner demand, and hints of a softer policy stance in key provinces.
Once nearly eliminated from the global scene after the 2021 crackdown, China has returned as the third-largest bitcoin mining hub, accounting for an estimated 14% of global hashrate as of October, according to Hashrate Index. The revival is largely concentrated in regions like Xinjiang, where surplus electricity and rapid data-center development have created favorable conditions for covert operations.
Miners told Reuters that abundant power in Xinjiang and Sichuan is encouraging new underground projects, and some former operators are returning. CryptoQuant estimates that 15–20% of global mining capacity is now active in China.
The resurgence is also reflected in hardware demand. Canaan, a major mining rig manufacturer, has reported a sharp rebound in domestic sales, aided by higher bitcoin prices and uncertainty over U.S. tariffs that have slowed overseas orders.
Although the Chinese government has not publicly reversed its crypto restrictions, its approach appears to be softening. Hong Kong’s stablecoin legislation and discussions around yuan-backed digital currencies point to a potentially more flexible stance on digital assets.
Hashprice Hits Record Low
Despite the renewed mining activity, profitability is under pressure. Bitcoin hashprice—a measure of miner revenue per unit of hashrate—fell to a record low of $34.2 per PH/s on Friday, according to Luxor.
Hashprice is influenced by four key factors: bitcoin price, network difficulty, block rewards, and transaction fees. It typically rises when BTC prices or transaction fees increase and falls when mining difficulty grows.
With bitcoin down over 30% from its October peak, muted transaction fees, and network hashrate hovering just above one zettahash (about 10% below recent highs), miner revenue has reached new lows. The next difficulty adjustment, expected Wednesday, is projected to decline slightly more than 2%.
