China remains a dominant force in the global Bitcoin mining network, controlling 55% of the hashrate despite the country’s ban on crypto mining and trading since 2021. Data from CryptoQuant shows that China’s significant presence in Bitcoin mining is being challenged as other countries, such as the US, increase their share of the hashrate.
CryptoQuant CEO Ki Young Ju highlighted that US mining pools now account for around 40% of the Bitcoin network’s hashrate, primarily driven by institutional miners with advanced technology and resources. On the other hand, Chinese mining pools continue to support smaller players in the region, showcasing resilience despite legal restrictions on crypto activities.
China’s strict stance on cryptocurrencies dates back to 2017 when the country banned Initial Coin Offerings (ICOs) and closed domestic exchanges. The 2021 ban on mining and trading aimed to mitigate financial and environmental risks associated with digital assets. However, the decentralized nature of Bitcoin has allowed Chinese miners to navigate around the restrictions, maintaining their influence over the global network.
Despite the ban, underground crypto trading markets thrive in China through VPNs and social media platforms, with estimated annual transactions reaching $86 billion. Additionally, China has been exploring alternatives like the digital yuan, a central bank digital currency controlled by the People’s Bank of China (PBoC), as part of its strategy to control financial systems while limiting decentralized cryptocurrencies’ impact.
Calls for change within China’s crypto policies have been voiced by industry leaders like Tron founder Justin Sun, who advocates for competition with the US to drive industry advancements. Reports suggest that China may be reconsidering its strict regulations on crypto, especially given its interest in blockchain technology and potential regulatory adjustments.
Recent developments hint at a possible shift in China’s approach to cryptocurrencies, particularly with emerging crypto hubs like Hong Kong gaining attention with potential support from Beijing. While official changes have not been announced, these developments signal a potential evolution in China’s regulatory stance towards cryptocurrencies in the future.