Lead China has staged a surprising return to the global crypto stage, reclaiming its position as the third-largest hub for Bitcoin mining in the world. According to a recent Reuters report, the Asian giant now controls approximately 14% of the global hashrate, defying the official ban imposed in 2021. This resurgence is driven by operators taking advantage of excess energy and robust data infrastructure in key provinces.
Mining activity, far from disappearing, has adapted and expanded in the shadows. Regions like Xinjiang and Sichuan have once again become nerve centers, offering low-cost electricity and surplus capacity in data centers that facilitate these operations. On the other hand, equipment manufacturers like Canaan have reported a significant rebound in their domestic sales, confirming renewed demand for specialized hardware within Chinese borders. Furthermore, it is estimated that between 15% and 20% of global mining capacity currently operates from this territory.
This boom occurs against a backdrop of challenging economic conditions for miners globally. “Hashprice,” a critical metric measuring expected profitability per unit of computing power, recently plummeted to a new all-time low of $34.2 per petahash/second (PH/s). Likewise, the combination of low transaction fees and elevated network difficulty has compressed profit margins. However, the drop in Bitcoin price from its October highs continues to exert financial pressure on less efficient operators.
A signal of a new regulatory stance in Beijing?
Although the central government has not officially revoked its veto, signs on the ground suggest a more pragmatic and less punitive stance. Uncertainty over United States tariffs has also diverted equipment demand back to the Chinese domestic market. Thus, Hong Kong is advancing with pro-crypto legislation, including regulations for stablecoins, which could be influencing a softer perception towards digital assets on the mainland. This tacit “flexibility” allows the industry to thrive as long as it does not threaten state financial stability.
he durability of this revival will depend on whether authorities decide to maintain their “blind eye” approach or initiate a new wave of crackdown measures. The upcoming network difficulty adjustment, projected with a drop of over 2%, is expected to offer slight relief to operating margins. Finally, the resilience of the Bitcoin network is reinforced by this unexpected geographic diversification, reducing dependence on a single geopolitical bloc.
