Compass Mining noted in a recent update that China currently holds an estimated 14% share of the global Bitcoin mining market. This, according to Hashrate Index, which reportedly makes it the world’s third-largest contributor to the overall global hashrate. Compass Mining also mentioned in their report that analysts now increasingly point to relatively cheap and stranded energy across several western regions, including Xinjiang, as a key driver behind this activity.
Compass Mining further stated that (as was widely reported over the past 8 years or s0) China had actually banned cryptocurrency mining (again) back in 2021, citing potential risks to financial stability as well as national energy goals and objectives.
Yet, Compass Mining pointed out that as renewable energy production in western provinces has increased steadily and often “remained underutilized, mining activity has quietly resurfaced.”
Under the cover of low-cost electricity and stranded power, “underground operations have returned and expanded across multiple regions.”
In 2024, China generated 3,460 TWh of renewable energy, a “19% year-on-year increase that accounted for about 35% of the country’s total electricity output.”
Wind and solar power reached a combined “1,830 TWh, up 27% from the previous year.”
As stated in the report from Compass Mining, the leading provinces for renewable energy production “include Xinjiang, Inner Mongolia, and Hebei.”
These regions contribute a considerable share of China’s “expanding clean energy supply, much of which could be utilized for Bitcoin mining.”
Xinjiang is one of the regions where a significant “share of Bitcoin mining activity takes place, and its renewable energy output has grown rapidly.”
The province was once China’s “center of coal consumption.”
In 2021, coal-fired power accounted for “more than 80% of Xinjiang’s electricity generation, reaching 367 TWh.”
Xinjiang’s energy mix has shifted at “an unprecedented pace over the past three years.”
Since 2022, Xinjiang’s new energy sector has now reportedly “experienced leapfrog development, with installed capacity growing from 38 GW to 104 GW by the end of 2024.”
As of Sept 15, 2025, renewable energy generation “on the Xinjiang grid reached 101 TWh, up 17.2% YoY.”
China’s expansion of renewable energy “created a challenge: utilization.”
Many regions generate far more wind and solar power than local grids can absorb “or transmit, leaving a significant share of this energy stranded.”
Data from Jan to Apr ’25 highlight the issue:
- Photovoltaic utilization rates:Tibet: 68%
- Western Inner Mongolia: 86%
- Qinghai: 86%
- Wind power utilization rates:Tibet: 68.8%
- Beijing: 87.5%
- Hebei: 87.7%
Low utilization rates signal mismatches “between generation and transmission capacity.”
For operators seeking access “to low-cost and underused electricity, these conditions make stranded renewable energy well suited for Bitcoin mining.”
Using Xinjiang province as an example, the region’s State Grid “released commercial and industrial electricity prices for June 2025 showing that most users on non–time-of-use plans pay about $0.06 per kWh.”
Under time-of-use pricing, rates range “from about $0.057 per kWh during standard hours to as low as $0.018 per kWh during deep off-peak periods.”
Behind the meter, miners report that access “to stranded or surplus renewable energy can reduce electricity costs further, approaching near-zero in specific conditions.”
This gives operators a significant competitive advantage, “since electricity cost is the largest factor in Bitcoin mining operations.”
China is also home to “the world’s three largest ASIC manufacturers, which means domestic miners benefit from lower logistical and procurement costs when acquiring new hardware.”
For comparison, several U.S. public miners have “disclosed their average power costs.”
CleanSpark reported an average electricity “rate of $0.056 per kWh.
Marathon Digital said its owned sites operated at about $0.039 per kWh in 2024.”
Cipher Mining disclosed an average rate of “about $0.027 per kWh at its 207 MW facility in Odessa, Texas.”
Some miners are also exploring “natural gas, flared gas, and other off-grid energy sources.”
In certain cases, the effective cost of gas can “approach near zero, though these setups depend on maturing technologies that may present stability and efficiency challenges.”
China continues to now focus on strengthening its “national power grid, improving energy storage technology, and managing a large and expanding renewable energy supply.”
Despite these priorities, the country is likely “to face stranded energy challenges for years to come.”
Compass Mining pointed out that given mainland China’s historically pragmatic policymaking, “some level of underground Bitcoin mining may continue to be tolerated as long as it does not disrupt broader energy objectives or create social or financial instability.”
But increased media attention and “public scrutiny could prompt regulators to tighten enforcement of the existing ban.”
Some research analysts have also reportedly raised the “possibility that China could consider state-directed Bitcoin mining if prices rise or if the US signals interest in accumulating more Bitcoin.”
Compass Mining also noted that any shift in China’s overall stance, whether toward stricter “enforcement or tacit state involvement, would have major implications for the global mining landscape.”
The update concluded that even fairly small indications of policy flexibility will be “seen as supportive of Bitcoin’s narrative as a resilient, globally distributed system.”