Mining Crypto in China: Law and Restrictions in 2026

As of 2026, mining cryptocurrency in China is not just discouraged-it’s a criminal act. If you’re caught running even a single rig in your garage, you could face fines, asset seizures, or arrest. This isn’t speculation. It’s the law. And it’s been this way since the government’s comprehensive ban on all cryptocurrency activities took effect on May 31, 2025.

How China Went from Top Miner to Total Ban

Just a decade ago, China controlled over 70% of the world’s Bitcoin mining power. Factories filled with thousands of machines hummed in Inner Mongolia, Sichuan, and Xinjiang, powered by cheap hydropower and coal. But the government didn’t see miners as innovators-they saw them as threats. By 2021, China had already shut down large-scale mining farms and banned cryptocurrency exchanges. Then came the final blow: in 2025, ownership, trading, and mining were all declared illegal. No exceptions. Not even for personal use.

Before 2021, regulators targeted big operations. After 2021, they started going after individuals. By 2024, police in Sichuan arrested over 120 people for owning mining rigs. In 2025, the State Administration of Foreign Exchange froze bank accounts linked to crypto purchases-even if the money was used to buy a single ASIC miner.

Why Did China Ban Crypto Mining?

There are four clear reasons behind the crackdown.

Energy use. Bitcoin mining consumes more electricity than entire countries like Argentina or the Netherlands. China’s goal is carbon neutrality by 2060. Crypto mining, especially in coal-heavy regions, directly conflicted with that. In 2024 alone, authorities shut down 47 mining farms for exceeding energy quotas.

Financial control. Cryptocurrencies operate outside the banking system. That means the government can’t track money flows, control capital flight, or enforce sanctions. When Chinese citizens started moving billions out of the country using crypto, regulators saw a crisis. The People’s Bank of China responded by making any crypto transaction-buying, selling, or mining-a violation of financial law.

Illicit activity. Crypto has been used in money laundering, ransomware payments, and underground markets. In 2023, Chinese authorities traced over $2.3 billion in illegal transfers through crypto wallets. That number only grew after the 2021 ban pushed more activity underground.

The digital yuan. This is the real endgame. China has spent over $10 billion developing the e-CNY, its central bank digital currency. The government doesn’t want competition. No decentralized coins. No private blockchains. Just one state-controlled digital money system. Every mining rig in the country is seen as a threat to that vision.

How the Ban Is Enforced

The ban isn’t just on paper. It’s enforced with real-time surveillance.

Electricity providers now flag unusual power spikes. A household using 50,000 kWh/month in a rural area? That’s a red flag. Authorities cross-check that data with bank records and internet traffic logs. If your router shows connections to mining pools like F2Pool or AntPool, you’re flagged.

Banks are required to block any transaction linked to crypto. Even if you send $100 to a wallet to buy a miner, your account gets frozen. In 2025, over 8,000 bank accounts were frozen for suspected crypto activity.

The Cyberspace Administration scans public forums, Telegram groups, and even private cloud storage for mining software downloads. If you’ve installed CGMiner or Awesome Miner on your PC, that’s enough for an investigation.

Ministry of Industry inspectors also visit electronics retailers. Selling ASIC miners without a license is now a felony. In 2025, 14 shops in Shenzhen were raided for selling mining hardware.

What Happens If You Get Caught?

The penalties are harsh and rising.

For first-time offenders, you might get a fine of up to 100,000 RMB (around $14,000 USD) and confiscation of equipment. Repeat offenders face prison time. In 2024, a man in Henan received a 14-month sentence for running a 10-rig setup in his basement. His wife, who helped pay the electricity bill, was also fined.

Businesses are hit harder. In 2025, a data center in Inner Mongolia was shut down after being linked to crypto mining. The owner was sentenced to five years and fined 5 million RMB. The facility was demolished.

There’s no legal gray area anymore. Even if you mined crypto before 2021, holding it now is illegal. The government doesn’t recognize crypto as property. Courts won’t protect your coins. If you’re caught with $10,000 worth of Bitcoin, it’s treated like contraband.

Is Any Mining Still Happening in China?

Yes-but it’s risky, small, and fading.

Studies from Tsinghua University in late 2025 estimate that underground mining still accounts for about 3% of global Bitcoin hash rate. That’s down from over 40% in 2020. These operations are hidden in warehouses, basements, and even abandoned factories. They run on stolen power or off-grid solar. Some use modified consumer electronics to avoid detection.

But it’s getting harder. Power companies now use AI to detect anomalies. One miner in Guangdong was caught because his solar panel output didn’t match his household usage. The system flagged the mismatch. He was arrested two weeks later.

Even if you avoid detection, the cost of electricity has risen. The government increased rates for high-consumption users by 40% in 2024. Mining rigs now cost more to run than they earn. Profitability is gone.

What This Means for the World

China’s ban didn’t just affect Chinese citizens-it changed the entire crypto world.

After the 2021 mining crackdown, miners flooded into the U.S., Canada, Kazakhstan, and Russia. The U.S. became the new mining leader, with Texas alone now hosting more hash power than all of China did in 2020. Mining hardware companies like Bitmain and MicroBT shifted production overseas.

Bitcoin’s network became more secure, not less. With mining spread across more countries, the network is less vulnerable to one government’s actions. But it also became more expensive. Electricity prices in the U.S. rose as demand grew.

China’s ban also accelerated the development of energy-efficient mining tech. New ASIC chips now use 30% less power than those made in 2021. That’s partly because miners had to adapt-or die.

What’s Next for China?

There’s no sign the ban will loosen. The digital yuan is now in use by over 600 million people. The government is testing it for taxes, welfare, and cross-border trade. Crypto is seen as a relic of the past.

Future enforcement will focus on AI-driven detection. New tools can now identify mining patterns from just three days of electricity data. Drones with thermal cameras are being used to spot heat signatures from hidden farms.

And the penalties? They’re getting worse. In early 2026, a new draft law proposed life sentences for large-scale crypto mining operations involving over 1,000 rigs. While not yet passed, it signals the government’s intent: total eradication.

Bottom Line

Mining crypto in China today isn’t a gray area. It’s black and white: illegal, dangerous, and financially pointless. The government has spent years building systems to detect, punish, and eliminate it. The infrastructure is in place. The laws are clear. The will is absolute.

If you’re thinking about mining in China, don’t. The risks far outweigh any possible reward. And if you’re holding crypto there? You’re holding something the state doesn’t recognize-and won’t protect.

The era of crypto mining in China is over. Not because the tech failed. But because the state decided it couldn’t tolerate competition.