Mining Crypto in China: Law and Restrictions in 2025
As of 2025, mining crypto in China is not just illegal-it’s a criminal offense. There are no gray areas, no loopholes, no exceptions. If you’re running a rig in a basement, leasing warehouse space for ASICs, or even holding Bitcoin earned from mining, you’re breaking the law. The Chinese government didn’t just shut down mining farms in 2021. It built a system to make sure it never comes back.
How China Went from Crypto Capital to Crypto Zero
Ten years ago, China was the heart of the global cryptocurrency mining industry. More than 70% of Bitcoin’s computing power-its hashrate-came from Chinese farms. Why? Cheap hydroelectric power in Sichuan and Xinjiang, access to cheap hardware from Shenzhen, and a regulatory environment that turned a blind eye. But that era ended quickly. In 2013, banks were told not to process Bitcoin transactions. In 2017, all domestic crypto exchanges were shut down. ICOs were banned. By 2021, the People’s Bank of China declared all cryptocurrency transactions illegal and ordered a nationwide shutdown of mining operations. Power supplies were cut. Equipment was seized. Miners scrambled to move hardware overseas. But the final blow came on May 31, 2025. That’s when China announced a comprehensive ban on all cryptocurrency activities-including ownership. No more trading. No more holding. No more mining. Not even in private. The law now treats any involvement in crypto as a criminal act.Why Did China Do This?
It wasn’t just about control. It was about four big reasons. First, energy use. Bitcoin mining guzzles electricity. In a country that pledged to hit carbon neutrality by 2060, letting miners run 24/7 on coal-powered grids was unsustainable. Sichuan’s hydro dams, once a mining paradise, were redirected to homes and factories. Second, financial sovereignty. China doesn’t want its citizens using a currency outside the state’s control. Cryptocurrencies bypass capital controls. They let money leave the country. They let people avoid taxes. They let criminals hide transactions. The government couldn’t tolerate that. Third, crime. Crypto has been linked to money laundering, fraud, and underground markets. Even if most miners aren’t criminals, the system makes it easy for them to hide. China’s authorities didn’t want to clean up the mess-they wanted to stop it before it started. And fourth, the digital yuan. China has spent billions developing its own central bank digital currency, the e-CNY. It’s not just a digital version of cash-it’s a tool for total financial surveillance. Every transaction is tracked. Every user is known. The government doesn’t need Bitcoin. It needs control. And the digital yuan gives it that.How They Enforce the Ban
China doesn’t rely on one agency. It uses a web of government bodies working together. The People’s Bank of China watches bank accounts. If money flows to a crypto exchange-even indirectly-it flags the account. Banks freeze funds. Customers get called in. The State Administration of Foreign Exchange tracks cross-border transfers. If someone tries to send yuan overseas to buy mining equipment, it gets blocked. The Cyberspace Administration monitors internet traffic. They scan for mining pool addresses, wallet connections, and even VPN usage linked to crypto sites. And then there’s electricity. Power companies now use AI to detect abnormal consumption patterns. A warehouse using 5 megawatts at night? That’s not a server farm. That’s a mining operation. They show up with police, cut the power, and confiscate the hardware. In 2024 alone, over 2,300 mining-related arrests were made. In early 2025, authorities seized more than 120,000 ASIC miners in Xinjiang. One case involved a farmer who hid rigs under his livestock shed. He was fined 1.2 million yuan and sentenced to three years in prison.
Is Any Mining Still Happening?
Yes-but it’s dangerous, small-scale, and fading fast. Some underground operations still exist. A few miners use solar panels on remote rooftops. Others tap into unmonitored industrial zones. Some even use modified electric vehicle chargers to power rigs during off-peak hours. But these are exceptions. The government’s surveillance is too advanced. Electricity monitoring is now nationwide. Financial tracking is real-time. Even small-scale miners are being caught. A 2025 report by the China Academy of Information and Communications Technology estimated that less than 2% of China’s former mining hashrate remains active-and even that’s shrinking. The cost of getting caught isn’t just financial. It’s personal. Jail time. Asset forfeiture. Blacklisting from future loans or jobs.What Happened to the Miners?
When China shut down mining in 2021, over 60% of global Bitcoin hashpower vanished overnight. Miners didn’t disappear-they relocated. The U.S. became the new hub. Texas, Georgia, and Washington state saw mining farms pop up in abandoned warehouses and data centers. Canada’s Quebec, with its cheap hydro power, became a hotspot. Kazakhstan, with its low taxes and proximity, briefly surged. Today, the U.S. controls nearly 38% of Bitcoin’s hashrate. Kazakhstan holds 12%. Russia and Canada each have around 8%. China? Less than 1%. The global mining industry adapted. Hardware became more efficient. Cooling systems improved. Renewable energy became standard. But none of that mattered in China. The government didn’t care how efficient your rig was. It cared that you were mining at all.The Market Impact
The May 31, 2025 ban sent shockwaves through crypto markets. Bitcoin dropped from $111,000 to $104,500 in under 24 hours. Ethereum fell 14%. Altcoins like Solana and Cardano lost over 20%. Over $750 million in leveraged long positions were liquidated. Traders who thought China might soften its stance were caught off guard. But the bigger impact was psychological. It proved that a single government could move markets with a single announcement. Investors now factor in regulatory risk like weather risk. If you’re holding crypto, you ask: “Could this country ban it tomorrow?”