Many people have the impression that the “mining” of cryptocurrencies is still stuck in the era of Bitcoin, which relies on wind power in the northwest in winter and hydropower in the southwest in summer. Thousands of machines, stuffed into the desert, are built on the banks of the Sichuan River, roaring day and night, and eating electricity like a mountain torrent.
But the reality is that what is more emerging in the industry now is a kind of “lightweight Mining”: not relying on hydropower, not going deep into the mountains, but quietly running a few devices in office buildings in the city, without the roar of fans or the smell of burnt circuit boards, just silently “calculating” and silently producing Tokens.
Due to work reasons, Lawyer Honglin often interacts with Web3 project parties, developers, and investors in Shanghai and Shenzhen. Many familiar friends take me to visit their offices, pointing to a pile of hardware machines to introduce to me that this is our Crypto Assets mining farm.
Outside the room is China’s most centralized financial center, bustling with activity. Inside the room, there are machines running silently, without any detectable sound or change in temperature, supporting decentralized finance and dreams.
This form of “lightweight mining” is actually a state that has naturally evolved within the industry under the pressure of high regulation in recent years. On one hand, constrained by policy risks, large-scale deployment has long been unsustainable; on the other hand, as many new projects have abandoned the Bitcoin-style PoW route in favor of lower-power mechanisms like PoS, distributed storage, and edge computing, the physical form of mining itself has also become “invisible.”
From a compliance perspective, this is actually a typical “unclear” state - the equipment is compliant, the network is compliant, and the operating nodes themselves are not illegal, but their revenue model and incentive logic do indeed belong to the realm of Crypto Assets. If you say this is not Mining, it seems you can’t completely dismiss it; if you say it is illegal, there is a lack of substantive illegal characteristics. This gives the industry a subtle space for survival: operating continuously in a gray area, neither too large nor too small, neither noisy nor quiet, but indeed still alive.
To truly understand this reality, we must start with China’s regulatory path regarding “Mining”.
As early as May 2021, the Financial Stability and Development Committee of the State Council made it clear in a meeting that “it is necessary to crack down on bitcoin mining and trading”, and since then, a systematic “mine clearance” action has been launched across the country. Traditional “mining areas” such as Xinjiang, Inner Mongolia and Sichuan took the lead in responding, successively issuing power rationing notices and clearing mines. In September of that year, the National Development and Reform Commission officially included “virtual currency mining activities” in the “elimination category” of the “Industrial Structure Adjustment Guidance Catalogue”, and since then the policy direction has been established.
The official reason given is that such activities “consume a lot of energy, have high carbon emissions, and contribute little,” which is inconsistent with the national industrial policy and the “dual carbon” goals. This characterization was based on certain realities at the time. The PoW mechanism dominated by Bitcoin was indeed a representative of high energy consumption and high density, with electricity usage surpassing that of some medium-sized countries, and much of this power came from “gray” sources.
However, with the evolution of industry technology, many crypto projects no longer rely on the PoW algorithm, but instead maintain the network through PoS, DPoS, distributed storage, and other methods. The computing resources required in this model are significantly reduced, and the deployment scenarios are gradually shifting from “suburban metal houses” to “urban office buildings.” You can call it mining, but it really doesn’t consume much electricity.
More complex is the fact that the rapid rise in AI development and computational power demand has turned some underlying facilities originally belonging to the encryption industry into “policy encouragement targets.” Edge computing power, distributed storage, and general-purpose GPU nodes, which were once the infrastructure for blockchain applications, are now being “shell acquired” by the AI industry. Moreover, on the computational power and architecture level, the boundaries between the two are inherently unclear—running an AI training model and running an on-chain validation node may use the same set of servers, with only the software and objectives being different.
This brings up a very real issue: the identification logic that regulatory bodies are used to, such as “Is the power consumption exceeding standards?”, “Is the equipment special?”, “Is it deployed in a centralized area?”, has almost become ineffective today. You can’t tell which project is engaged in legitimate AI computing power business, which project is using shell companies to mine Tokens, and which project is doing both. Reality has long since blurred the boundaries of regulation.
So many times, what we see is not “Mining is being revived”, but rather “it never died, it just changed its appearance”. You will see many Web3 projects that superficially promote AI collaboration and edge node scheduling, but when implemented, they are actually still running the validation logic of a certain chain; there are also projects that use the guise of data security and encryption computing, but in reality, they are just building their own Token issuance mechanism.
For local governments, this situation is equally tricky. On one hand, there is a clear prohibition from the central government on “Mining”, while on the other hand, there is strong support for directions such as “computing power infrastructure” and “AI large model training”. If a project’s business model straddles both lines, whether to support it, how to regulate it, and whether it constitutes a violation actually have no clear answers.
This kind of ambiguous state further leads to many projects in reality “run if they can, hide if they can,” which instead gives rise to a more concealed, mixed, and flexible “underground Mining ecosystem.” You can’t find it through investigation, nor can you calculate it clearly; the electricity is residential, the space is an office, the accounts are compliant, and the entity has a license, but it is still calculating a Token. At this time, if you apply the traditional regulatory logic, it will no longer keep up.
As a legal compliance practitioner in the Web3.0 industry, Lawyer Honglin’s personal judgment is that among China’s “three bans” on Crypto Assets (ICO, Crypto Assets exchanges, Mining), if there is indeed room for relaxation in the future, the first to loosen might be “Mining”.
It is not because of a shift in national attitude, but rather because the “new miners” have deviated from their original definition. It is difficult to describe them as “high energy consumption, low contribution” anymore. On the contrary, they may have already become the “computing power entrepreneurs” you encourage, holding subsidies from technology parks, participating in AI competitions, and seriously registering companies, paying taxes, and issuing salaries, with profits generated not only in Renminbi but also in globally convertible Tokens.
Moreover, as AI and Web3 are increasingly integrated, many blockchain teams are actually participating in AI model pre-training, data labeling, or algorithm optimization; while many AI companies have also realized that on-chain incentive mechanisms are more efficient in “crowdsourced computing” and “edge participation”. At this point, forcibly separating the relationship between Web3 and computing power will only become more and more unrealistic.
Of course, I’m not saying that regulation should be completely relaxed, but we must acknowledge that the shape of this industry has indeed changed, and we can no longer use the standards from three years ago to govern the reality five years later. Especially when it comes to “ambiguous areas” such as computing power infrastructure and AI service capabilities, what needs to be done may not be a total denial, but rather to clarify which behaviors should fall under the data industry category, which behaviors belong to financial regulatory objects, and which behaviors can operate compliantly but must be registered and reported through a “positive list + industry classification” approach.
Otherwise, if we forever equate the term “Mining” with illegal and backward practices, we would indeed miss out on a part of the future.
Mining has evolved into more than just a compliance issue or an energy issue; it has become a question of “how we understand the evolution of infrastructure”. From Bitcoin’s “hash power for blocks” to the AI era’s “computing power as a resource”, what we essentially see is that an increasing number of underlying computing power nodes are transforming into universal interfaces for the digital society. If the past decade was characterized by “whoever can mine coins makes money”, then the next decade is likely to be defined by “whoever masters flexible computing power holds the initiative in the industry”.
In this era where the competition for computing power is becoming increasingly fierce globally, if we cannot establish a mining and computing power integration mechanism domestically that respects the underlying technological pathways and can be included in regulatory oversight, we are likely to be absent in the next wave of global competition for computing power infrastructure.
Instead of blocking, it is better to see its true nature clearly; instead of hiding it, it is better to incorporate it into a transparent regulatory system. This way, at least it can reduce the concerns of projects that could operate openly in the sunlight, as well as the motives for gray operations.
This is a new issue that really needs to be discussed.
