China's ban ineffective? 14% of Bitcoin mining computing power operates "underground", increasing the risk of a 51% attack.

China was once the undisputed center of Bitcoin Mining, but the situation changed after the government banned mining in 2021. However, according to Luxor's Q4 2025 update on the global hashrate map, China currently accounts for 14.05% of Bitcoin's total computing power, approximately 145 EH/s, which is a slight rise from 13.8% in Q3, making it the third largest contributor in the world, surpassed only by the United States and Russia.

China's Bitcoin Mining: From Ban to Underground Revival

(Source: Luxor)

China was once the undisputed center of Bitcoin Mining. With cheap electricity and leading hardware manufacturers, China became the global leader in Bitcoin Mining. However, this situation changed after the Chinese government banned Mining in 2021. In late September 2021, the People's Bank of China (PBOC) further prohibited all cryptocurrency transactions. The People's Bank of China pointed out that cryptocurrencies not only fueled financial crimes but also posed an increasing risk to the Chinese financial system.

This ban triggered the largest migration in the history of Bitcoin mining at that time. Millions of mining machines were forced to shut down or were transported overseas, and the total computing power of the Bitcoin network plummeted by over 50% within a few weeks. The United States, Kazakhstan, and Russia became the main recipient countries for these mining machines. The market generally believes that China has completely withdrawn from the Bitcoin mining sector.

However, fast forward to today—despite the government’s strong crackdown on all cryptocurrency miners, many miners have still found ways to continue operating. According to Luxor's global hashrate map updated for Q4 2025, China currently accounts for 14.05% of the total computing power for Bitcoin mining, roughly 145 EH/s. This is a slight rise from 13.8% in Q3, indicating that underground mining activities in China not only exist but are also expanding.

Kaan Farahani, a research assistant at Luxor, told Cryptonews that Luxor's global hashrate map estimates the geographical distribution of Bitcoin mining activities worldwide. Farahani stated, “The map provides a weighted hashrate concentration for various regions by integrating pool data, ASIC transaction flows, and firmware adoption trends.” According to recent data, China is the third-largest contributor to Bitcoin mining in the world, behind the United States and Russia.

The survey results from Luxor did not indicate the specific destination of the Computing Power. According to a report by Mining Weekly, multiple sources within the ASIC supply chain point to a possible destination: Xinjiang. This region is relatively isolated and rich in energy resources, and it had been a long-term hub for Bitcoin Mining before China implemented the ban in 2021. Xinjiang possesses abundant coal and hydropower resources, with extremely low electricity costs, making it an ideal location for energy-intensive Bitcoin Mining.

The Essence of Cryptopunk in Underground Mining and the Dilemma of Law Enforcement

Although it may not be entirely surprising that China continues to engage in Bitcoin mining, it illustrates the dark and underground nature of the mining industry. Kent Halliburton, CEO and co-founder of the Bitcoin mining platform Sazmining, told Cryptonews that he is not surprised that China is still mining.

“This is one of the charms of Bitcoin Mining. It is a cypherpunk style of Bitcoin Mining, which means that as long as you have electricity and hardware, you can mine Bitcoin on your own. It's hard to shut down mining in remote areas, which is why I believe the Computing Power we see in China will continue to exist,” Halliburton said. This statement reveals the essential characteristics of Bitcoin Mining: decentralization and censorship resistance.

The original intention of Bitcoin's design is to resist control by any single entity, including governments. As long as there is electricity and hardware, anyone can participate in Mining, and this openness makes it extremely difficult for government bans to be enforced. Although the Chinese government can shut down large publicly operated mining farms, it cannot completely eliminate the small or medium-sized farms scattered in remote areas. These farms utilize abandoned factories, leftover electricity from rural areas, and even illegal electricity theft to maintain operations.

Other regions that are considered illegal for Bitcoin mining have also shown signs of growth. For example, Farahani pointed out that Luxor's computing power map provides insights into the situation in Iran, estimating that by the fourth quarter of 2025, the computing power in the region will be around 8 EH/s, accounting for 0.75% of the global market share. According to Halliburton, Iran is another typical example of Bitcoin mining, although most of it is illegal. Iran initially banned Bitcoin mining for four months in May 2021, and a second ban was implemented in December 2021.

“Essentially, any country that strictly controls capital outflow may limit or attempt to ban Bitcoin mining,” Halliburton said. “But as long as you have Computing Power, and the right hardware to control it, you can generate Bitcoin. This means that if you want to stop capital outflow, you can achieve it through Bitcoin mining.” This paradox reveals the dilemma faced by authoritarian governments: banning mining is for capital control, but mining itself is a tool to circumvent capital controls.

95% of equipment poses national security threats made in China

In addition to Mining, a recent study by Bitcoin solution manufacturer Auradine found that over 95% of Bitcoin ASIC Mining equipment is manufactured by Chinese companies such as Bitmain, MicroBT, and Canaan Creative. Auradine's report indicates that Chinese equipment manufacturing poses a significant threat to U.S. national security and critical infrastructure. This finding is more concerning than China's underground Mining.

Auradine's Chief Strategy Officer Sanjay Gupta told Cryptonews that the mining infrastructure operations in China are concerning for many reasons. For example, he mentioned that over a million Bitcoin mining machines made in China and equipped with foreign firmware are connected to the U.S. power grid. “This poses potential severe cybersecurity risks to the power grids in multiple states,” Gupta said. “If software is embedded in these Chinese mining machines, once triggered, coordinated cyberattacks could cause a large number of machines to rapidly overclock or decelerate simultaneously, which could lead to catastrophic failures of the U.S. power grid.”

This threat is not purely theoretical speculation. Bitcoin mining equipment consumes a large amount of electricity, and the electricity usage of large mining farms can be comparable to that of small cities. If a million mining machines suddenly operate at full speed or suddenly shut down, the impact on the power grid could trigger cascading failures. More dangerously, if malicious code is embedded in the firmware of these devices that can remotely control their behavior, then they become decentralized power grid attack weapons.

Three Major National Security Risks of Chinese-Made Mining Machines:

Grid Attack: A million mining machines operating in coordination could paralyze the US power grid.

51% Attack: Equipment manufacturers may monopolize and control the Bitcoin network during geopolitical conflicts.

Data Monitoring: Embedded firmware may collect mining data or implant backdoors.

Gupta added that BTC Mining hardware supply is highly concentrated, and under worsening geopolitical circumstances, the Bitcoin protocol may face a 51% monopoly risk. President Trump recently imposed tariffs on China, which could rise to 155% in the coming weeks, further exacerbating this threat. Gupta commented, “This could have a huge impact on the value of BTC and trigger a chain reaction in the financial markets.”

A 51% attack refers to a situation where a single entity controls more than 50% of the network's Computing Power, allowing it to manipulate transaction records, perform double spending, or prevent other miners from confirming transactions. If the Chinese government were to requisition all China-made mining machines (regardless of their physical location) in extreme circumstances, it could theoretically approach or exceed the 51% threshold. While the probability of such a scenario occurring is extremely low, the potential consequences are serious enough to raise significant concerns.

The Urgency of Diversified Supply Chains and Technological Innovation

Clearly, despite the ban, Bitcoin Mining and production continue in China. So, what does this mean for miners in regions where Bitcoin Mining is legal? Farahani stated that Luxor was not aware of the challenges or threats posed by the mining operations in China. On the other hand, Gupta believes that Chinese companies supplying mining equipment will bring complex situations to other regions.

He said, “To solve this problem, we need to have strong American Bitcoin mining suppliers to drive continuous innovation and performance in the mining business.” This call reflects the industry's urgent need for supply chain diversification. Auradine itself is one of the American mining machine manufacturers attempting to break the Chinese monopoly, but it is extremely difficult to challenge the already established Chinese supply chain.

Chinese manufacturers have significant advantages in cost, scale, and technological accumulation. Bitmain, MicroBT, and Canaan Creative have established a complete industry chain after more than a decade of development, from chip design to large-scale production, which is extremely mature. It is nearly impossible for new entrants to achieve the same cost-effectiveness in a short period of time. This structural advantage explains why 95% of the equipment is still made in China.

Gupta added that looking ahead, Bitcoin miners should have the technology to respond to energy demands, allowing them to quickly increase or decrease power consumption based on the needs of the state or regional power grid. This “demand response” capability can not only reduce grid risks but also enable miners to participate in ancillary services in the electricity market, creating additional revenue. At the same time, the structure and historical legacy issues of mining in China may continue to loom over the global network. In the rapidly changing cryptocurrency world, China has not disappeared but is operating on the fringes.