Recent reports reveal that China retains the second spot in the rank of nations with the highest hash rate in Bitcoin mining. This is a contradiction to the assumed and somewhat expected outcome, considering the anti-cryptocurrency campaign that was carried out in the country for most of 2021.

Before the anti-crypto campaign in China, which involved a series of bans and intervention from the government, China was by far the leader in terms of regions where Bitcoin and other cryptocurrencies were mined. As of 2019, the country accounted for around 75% of the global Bitcoin hash rate, earning it the reputation of the Bitcoin and cryptocurrency headquarters of the world.

The clampdown of 2021 left a huge impact on the overall cryptocurrency industry in China, with the mining sector among those to be most affected. Reports from the government quarters claimed that Bitcoin mining had been eliminated from China, and the hash rate had fallen to zero. However, recent reports have shown otherwise.

The latest update from the Cambridge Bitcoin Electricity Consumption Index (CBECI) shows that as of January 2022, Bitcoin miners in China accounted for a total of 21.1% of the global hash rate distribution. The only country ahead of China in rank from the report is the United States, whose miners accounted for 37.8% of the global hash rate.

As mentioned above, the CBECI data acknowledged the report of the Bitcoin hash rate in China falling to zero. This happened between July and August 2021, at the peak of the clampdown in the country. Many Bitcoin miners relocated out of China during this period, with several others shutting down their farms and ceasing operation.

The recent report suggests that those who may have remained behind are beginning to reactivate their mining rigs, albeit in secret. Existing laws in the country do not allow any individual or company to engage in Bitcoin and cryptocurrency mining activities. A few groups have been found in the past to break the law, and they were made to face severe penalties.

In March 2022, government agencies discovered a secret mining hub during a raid that was carried out in the Jieyang city of the Guangdong province. Over 190 professional mining devices that were valued at over 5 million yuan, equivalent to $790K were discovered and seized during the raid. The operators of the illegal hub were served with the appropriate penalties that the government had put in place.

Part of the punishments for any individual or group found to be engaging in the illegal mining of Bitcoin and cryptocurrencies include the payment of an elevated price of electricity. The punishment varies from one province to another. For instance, In Zhejiang province, anyone found to be engaging would be charged 0.5 yuan per kilowatt-hour, Inner Mongolia charged 1 yuan while the charge in Hainan province is 0.8 yuan under similar circumstances.

These extra charges are simply extra punishments, in addition to the already existing state sanctions against anyone found to be breaking the rules against Bitcoin and cryptocurrency mining.

Also at the beginning of 2022, the Chinese government initiated a crypto-miner identification contest. The contest promised to offer as much as $25,000 to any individual or group that would identify cryptocurrency miners within the state. It was added as a part of the annual Digital China Innovation Contest.

Despite these efforts, there seems to still be a measurable number of active cryptocurrency miners in China. This is something that could worry the government and its agencies, all of which have neither relented in their efforts to rid the country of all forms of Bitcoin and cryptocurrency activities.