China Reaffirms Bitcoin Ban and Warns Against Stablecoins – Yet Mining Activity Rebounds

Central Bank Maintains Crypto Ban

The People's Bank of China (PBoC) has reaffirmed its uncompromising stance against cryptocurrencies. At a meeting on November 28, 2025, the monetary authorities made clear once again that virtual assets remain completely banned on the mainland ^[1].

Neither cryptocurrencies nor stablecoins possess the legal status of fiat money according to the PBoC. Their use in market transactions thus remains illegal ^[1]. Particular focus was placed on financial risks posed by stablecoins, which regulators believe fail to meet essential compliance requirements such as KYC checks and anti-money laundering measures ^[1].

The PBoC warned that the lack of transparency in these instruments opens the door to fraud schemes, money laundering operations, and unauthorized cross-border capital flows ^[1]. The authority announced it would intensify cooperation with public security agencies to specifically curtail illegal activities in the virtual currency sector ^[1].

Surprising Return of Bitcoin Mining

Despite the comprehensive ban on mining and centralized exchange activities in place since 2021, new data reveals a remarkable development: Bitcoin mining operations have resumed in China. Prior to the 2021 ban, Chinese miners controlled approximately 65 percent of global Bitcoin computing power ^[2].

According to data from the Hashrate Index from October 2025, China now accounts for roughly 14 percent of global Bitcoin mining, making it the third-largest mining country after the United States and Kazakhstan ^[2]. Analysts at blockchain research firm CryptoQuant estimate the actual share to be between 15 and 20 percent ^[2].

Particularly revealing are sales figures from mining rig manufacturer Canaan. While China accounted for only 2.8 percent of Canaan's revenue in 2022, this share rose to 30 percent in 2023. In the second quarter of 2025, it is reported to have exceeded 50 percent ^[2].

Energy Surpluses as Driving Factor

Mining activities are concentrated primarily in energy-rich provinces such as Xinjiang and Sichuan ^[2]. These regions produce more electricity than they can efficiently transmit to coastal cities. The surplus power – mainly from coal in Xinjiang and hydroelectric sources in Sichuan – would otherwise remain unused ^[2].

Additionally, local governments have constructed large data centers in recent years. When regular demand falls short of expectations, operators lease capacity and electricity to Bitcoin miners ^[2]. The rise in Bitcoin prices since 2024 has further improved the profitability of these operations ^[2].

Growing Disparity with Hong Kong

While Beijing maintains a tight grip, Hong Kong is moving in a different direction. The special administrative region introduced a licensing framework for stablecoins in August 2025 ^[2]. As the sole approved pathway for monetary digitalization on the mainland, the PBoC again emphasized the digital yuan (e-CNY) ^[1].

Market observers point to the widening disparity between mainland China and Hong Kong. While Hong Kong develops regulated frameworks for stablecoins and crypto service providers, the central government continues one of the world's strictest crypto regimes ^[1]. These divergent approaches suggest an increasingly differentiated Chinese stance toward digital assets – marked by strict control on the mainland and cautious openness to experimentation in Hong Kong.