Bitcoin: China Quietly Controls 55% of Global Bitcoin Mining Despite 2021 Crypto Ban

Three years after Beijing's ban on cryptocurrencies, Chinese Bitcoin miners still maintain a dominant position in the global network. According to Ki Young Ju, founder and CEO of CryptoQuant, more than 55% of Bitcoin’s mining network is still controlled by Chinese mining pools.

This resilience is partly due to the ingenuity of local miners. Despite the nationwide crackdown, many have found ways to continue their activities in the shadows, using various methods to work around the restrictions. Some have resorted to relocate their operations to neighbouring countries while retaining remote control from China.

Moreover, the Chinese mining infrastructure remains a major asset to the Chinese economy. Regions rich in hydroelectric power, such as Sichuan, retain a significant competitive advantage in terms of operational cost.

China’s Crypto Regulations to Change by 2025

Despite this paradoxical relationship, there are signs that China might finally be willing to accept Bitcoin following the update to the Anti-Money Laundering (AML) regulations in 2025. Discussions are underway to integrate crypto transactions into anti-money laundering regulations by 2024, suggesting a more pragmatic approach.

China used to dominate the Bitcoin mining industry, long before the 2021 ban. At one point, China even contributed to more than 75% of the global hashrate at one point.

During that time, many miners were forced to shut down their operations after the Chinese government rolled out the ban. As a result, many miners were forced to shut down operations, and some relocated to more crypto-friendly jurisdictions like the U.S and Kazakhstan.

This potential opening is hence part of a broader context of the technological competition between China and the United States. As mining becomes more professional across the Atlantic, Beijing might seek to keep pace in a sector it once dominated.

Bitcoin Miner Revenue Faces Decline

Globally, Bitcoin miners faced significant financial pressure in August, experiencing the lowest revenue month in a year. According to Bitbo data, miner revenue dropped by over 10.5%, reaching $827.56 million in August compared to $927.35 million in July. However, this still marked a 5% increase from August 2023.

August also saw a slight decline in Bitcoin production, with 13,843 BTC mined compared to 14,725 BTC in July. Miners have been grappling with Bitcoin's stagnant price around the $25,000 mark.