Will China Lift Bitcoin Mining Ban Amid Trump Tariff Pressure?
A recent report from the University of Cambridge confirms that the United States has now taken the lead in global Bitcoin mining, raising questions about how China might respond. While the country has long maintained an anti-cryptocurrency stance, Chinese mining pools have historically controlled a significant share of the global Bitcoin hashrate.
The current competitive advantage of the US and renewed tensions over trade policy may prompt China to reconsider its position. BeInCrypto spoke with experts from The Coin Bureau and Wanchain to find out what factors could prompt China to change its attitude towards digital assets.
US Overtakes China to Become World's Largest Bitcoin Mining Hub
The United States has firmly established itself as the world's largest Bitcoin mining hub. The latest report from the Cambridge Centre for Alternative Finance (CCAF) found that the US accounts for 75.4% of the reported hashrate.
Global distribution of Bitcoin mining activity. Source: CCAF.
This new development confirms a significant shift in the distribution of power in the Bitcoin mining industry. China has been the leading country in the space since 2017, using its advanced infrastructure and low electricity rates to control more than 75% of the world’s hashrate at one point.
However, the country subsequently introduced strict restrictions on this industry.
Cryptocurrency Crackdown in China
In 2019, China's National Development and Reform Commission (NDRC) announced plans to ban cryptocurrency mining, issuing a bill classifying the activity as an “undesirable industry.”
Two years later, at least four provinces in China have begun shutting down mining operations, with restrictions intensifying amid concerns about excessive electricity consumption.
By the end of 2021, the government declared all cryptocurrency-related transactions illegal, further tightening the ban and prohibiting overseas exchanges from serving Chinese citizens.
However, China has demonstrated an ability to adapt to geopolitical changes that could threaten its economic influence, and current conditions could pose such a challenge.
Has Bitcoin Mining Really Stopped in China?
Despite China's official stance on cryptocurrencies, mining activity in the country has not stopped. In July 2024, Bitcoin environmental impact analyst Daniel Batten reported that China's hashrate currently stands at around 15% of the global total.
“Despite the official ban, the infrastructure already exists, from offshore mining to cross-border trading centers. Given the growing global adoption momentum for cryptocurrencies and the leading role of the US, China may be interested in a more strategic approach to this issue, even if unofficially,” Nick Pakrin, co-founder of Coin Bureau, told BeInCrypto.
China also has a geographical advantage over the United States, especially in technological development.
Mining cryptocurrencies, particularly proof-of-work cryptocurrencies like Bitcoin, relies on application-specific integrated circuit (ASIC) hardware to perform the complex computations required for verification and mining.
China's position as the largest exporter of cryptocurrency mining equipment, especially to the United States, gives it a potential advantage if it decides to rebuild its mining industry.
The escalating tariff conflict between the two countries adds uncertainty to the long-term economic sustainability of the American mining industry.
Pakrin believes that the combination of trade tensions and the US's increasing efforts to dominate the cryptocurrency space may be enough to force China to reconsider its position.
“It is unlikely that China will officially lift the ban on cryptocurrency mining and trading anytime soon. However, given that US miners are taking up an increasing share of the Bitcoin hashrate, China will certainly take notice and may quietly reconsider its position,” Pakrin told BeInCrypto.
However, China has other strategies that go beyond restarting Bitcoin mining and are aimed at undermining US dominance.
China's nuanced approach to issues beyond US influence
Despite anti-cryptocurrency policies at home, China may see value in digital assets that can help balance the influence of the US dollar as a global currency.
Several countries have already implemented or are considering introducing central bank digital currencies (CBDCs) to strengthen their national currencies. China is at the forefront of these initiatives.
“Despite the ban on Bitcoin mining, China is actively involved in the digital asset space through initiatives such as CBDC research and the digital yuan, or e-CNY,” Wanchain CEO Temujin Lui told BeInCrypto.
In fact, China's push to create a digital yuan is partly driven by a desire
Source: cryptonews.net
