China’s vast power empire has an extreme impact on cryptocurrencies (especially mining), presenting an ultimate contradiction between a “solid physical foundation” and “tight policy regulation.” This contradiction is not only reshaping the global hash rate map, but also changing the survival logic of the mining industry.

1. Physical Infrastructure: the “Magnetic Effect” of Cheap Electricity

In terms of energy endowment, China fully has the hard power to dominate global crypto mining:

Cost trough: Hydropower during the wet seasons in Sichuan and Yunnan, as well as thermal and wind power in Xinjiang and Inner Mongolia, provide globally highly competitive cheap electricity. In theory, this is the “money-printing machine” environment miners dream of.

Implicit reflows: Although after the comprehensive ban in 2021, hash rate outflows occurred broadly, according to data such as HashrateIndex, by 2026 China’s Bitcoin hash rate share has quietly rebounded to 14%-20% (third globally). This is mainly due to some local tacit approval of using “abandoned water and abandoned solar” power, as well as enterprises’ illegal power supply diversion (e.g., cases where polysilicon plants were fined).

2. Policy Reality: the “Squeezing Effect” of AI and Green Transition

The “AI computing power competition” you mentioned is the key variable. China has abundant electricity, but the policy direction is clearly to “protect AI and abandon mining”:

Intensified regulation: In February 2026, the People’s Bank of China and eight other departments again upgraded oversight, listing mining as a “phase-out” industry, strictly prohibiting new projects, and imposing massive fines for illegal power supply (e.g., a case where a company in Xinjiang was fined 100 million yuan).

Resource competition: AI data centers and computing infrastructure are included as new productive forces, enjoying policy support and priority access to the power grid. The cheap green electricity and land resources that might have flowed to mining are being siphoned off by the “East Data West Computing” project and AI smart computing centers. From a compliance standpoint, mining farms cannot compete with AI.

3. Specific Impacts on the Cryptocurrency Market

Hash rate migration and cost increase: Large numbers of mining rigs are forced to relocate to the Middle East, North America, or Central Asia. The global hash rate centers are “de-China-ized,” and miners face higher compliance and construction costs.

Selling pressure and transition: During price-decline cycles (e.g., in 2026, when Bitcoin fell back from its peak), high electricity cost forces miners to sell Bitcoin to maintain cash flow. Leading mining firms (such as Core Scientific) even cleared their BTC holdings, converting mining sites into AI data centers—further reducing long-term spot-holding support in the market.

Network decentralization: Hash rate is redistributed globally, reducing the risk that China’s power fluctuations will concentrate as a single, centralized risk to the network’s hash rate.

Summary

China’s power empire could have easily supported global crypto mining, but under the dual national policies of “AI first” and “financial security,” cryptocurrency mining in China has shifted from a “legitimate industry” to a “crackdown target.” This not only raises the marginal cost of mining worldwide, but also forces the industry to transition to compliant green-energy regions. For holders of coins, this means an upward shift in the mining cost line (production costs), which may subject the coin price to greater downside pressure during bear markets. #Gate广场四月发帖挑战