In the remote mountain valleys of Ma’anshan in Sichuan Province, silence has replaced the once-thunderous hum of thousands of Bitcoin mining rigs. Just months ago, this region buzzed with digital gold rush activity—miners harnessed surplus hydropower to mine Bitcoin at rock-bottom electricity costs. Today, the data centers stand empty, doors sealed, and operations relocated. What caused this sudden exodus?
This is the story of how Bitcoin miners in China operate under regulatory gray zones, migrate seasonally for energy efficiency, and navigate an uncertain future amid tightening oversight.
The Rise and Fall of a Mountain Mining Hub
In February, investigative journalists discovered over 10,000 ASIC mining machines installed across small hydropower stations in Ma’anshan. These facilities operated around the clock, converting flowing river water into digital currency. But by late April, everything had changed.
At the Banjiao Creek Hydropower Station—a key mining site—the silence was striking. No more roaring fans or blinking LEDs. "They left on April 25th after 2 p.m. It was a huge loss," said Su, the留守 staff member managing the station. Previously, the mining operation consumed between 4 million and 5 million kWh of otherwise wasted hydropower each month, contributing over 1 million RMB in monthly electricity revenue—more than 12 million annually.
Yet despite these economic benefits, all mining equipment was packed up and moved out.
👉 Discover how miners optimize profits through strategic power sourcing
Why Leave During Peak Power Season?
Sichuan enters its wet season in May, when rainfall surges and hydropower generation peaks. For Bitcoin miners, this period offers some of the cheapest electricity in the world—often below $0.03 per kWh. Normally, this is prime mining season.
So why shut down precisely when conditions are most favorable?
The answer lies in cost control and risk management. While global Bitcoin prices soared past $10,000 during this period, making daily mining rewards extremely valuable, operators still chose to halt operations. One anonymous mining executive explained: “Stopping even one day means losing tens of thousands in potential revenue. Plus, relocation costs can run into millions.”
Still, migration is part of the business model. Many Chinese mining firms follow a seasonal rhythm: they operate in southwest China during the wet season (May–October), then relocate to coal-powered regions in Xinjiang or Inner Mongolia during winter when hydropower dries up.
This time, however, the timing raised eyebrows—shutting down just before peak production seemed counterintuitive.
Regulatory Gray Zones and Energy Loopholes
Bitcoin mining exists in a legal gray area in China. While not explicitly illegal, it operates without clear regulatory frameworks.
One critical issue is off-grid power usage. Most mountain mining sites like Banjiao Creek don’t connect to the national grid. Instead, they buy electricity directly from hydropower stations—an arrangement outside the scope of traditional utility regulation.
A spokesperson from State Grid Sichuan confirmed: “We have no jurisdiction here because the power never enters our network.” Under current power reform policies, direct power transactions between producers and consumers are encouraged—but only under specific licensing and reporting requirements. These mining setups fall into a loophole: technically compliant with energy sale rules if both parties hold proper permits, yet unmonitored by financial or blockchain regulators.
Zhang Jun, senior researcher at Taiyi Cloud Strategy Institute, noted: “Bitcoin mining is still a new phenomenon. Regulators are still figuring out how to classify it. As long as existing laws aren’t violated, businesses exploring innovative models aren’t doing anything wrong.”
Compliance Challenges: Fire Hazards and Financial Risks
Although no illegal power usage was found during inspections, authorities identified operational risks.
Local government officials revealed that multiple agencies—including grid companies and fire departments—visited Banjiao Creek in mid-April. Findings included:
- All necessary permits were in place (generation, sale, tax compliance)
- No evidence of electricity theft
- Monthly tax payments were up to date
- Major concern: server rooms ran at excessively high temperatures, posing fire hazards
The fire department ordered immediate rectification. More broadly, inspection reports emphasized monitoring internet finance risks, including illegal fundraising and systemic financial threats.
An insider explained: “The focus isn’t on mining itself—it’s on preventing underground financial activities disguised as mining operations.”
Mining vs. Trading: Understanding the Regulatory Divide
It’s crucial to distinguish between Bitcoin mining and trading platforms—two very different segments.
As Zhang Jun clarified:
- Mining involves computational work: validating transactions and securing the blockchain.
- It does not involve leverage trading, margin lending, or fundraising—all activities previously restricted by the People’s Bank of China (PBOC).
Thus, while PBOC has cracked down on exchange withdrawals and speculative trading since February, mining remains technically permissible under current guidelines.
However, rumors suggest new regulations are imminent. In May, CCTV reported that the PBOC plans to release two upcoming policies:
- Management rules for Bitcoin trading platforms
- Anti-money laundering (AML) standards for crypto exchanges
Though neither directly targets miners, the writing may be on the wall: increased scrutiny could soon extend to energy-intensive operations.
Why Migrate? The Push and Pull Factors
Miners insist the move wasn’t forced.
A source close to relocated teams said: “The shutdown wasn’t entirely passive. Clients demand lower costs and better efficiency—we’re always scouting new locations.”
This reflects a strategic reality: even without regulatory pressure, profit margins drive decisions. Miners constantly evaluate:
- Electricity price stability
- Climate for cooling
- Physical security
- Regulatory tolerance
Some speculate destinations include remote parts of Yunnan, Tibet, or even overseas jurisdictions with favorable energy policies.
👉 See how top miners maintain profitability across shifting landscapes
FAQ: Common Questions About Bitcoin Mining in China
Q: Is Bitcoin mining legal in China?
A: Not explicitly banned. The PBOC classifies Bitcoin as a “virtual commodity,” allowing individuals to trade at their own risk. Mining itself isn’t illegal if conducted with合法 power sources and proper permits.
Q: Why do miners move seasonally?
A: To take advantage of low-cost hydropower during Sichuan’s wet season (May–Oct), then shift to coal-powered regions in winter when hydropower declines.
Q: Do miners steal electricity?
A: No verified cases at Banjiao Creek. Most use direct contracts with licensed hydropower stations. However, off-grid setups remain poorly monitored.
Q: Could new regulations stop mining?
A: Not necessarily—but stricter AML or energy reporting rules could raise compliance costs and push smaller players out.
Q: Who benefits from mining closures?
A: Local governments may lose tax income; hydropower stations lose revenue; but regulators gain greater control over decentralized financial activities.
Q: Are miners afraid of regulation?
A: Surprisingly, many want clear rules. As one miner put it: “We’d rather have transparent laws than live underground.”
The Future: From Shadows to Sunlight?
The disappearance of the Banjiao Creek mine highlights a broader tension: innovation versus oversight.
Miners don’t oppose regulation—they oppose uncertainty. Clear rules would allow them to invest confidently, hire locally, and contribute openly to regional economies.
Without formal recognition, however, there’s a real risk that mining goes fully underground—operating in secrecy, avoiding taxes, and evading safety standards.
As one industry observer warned: “If we keep pushing miners into hiding, we lose transparency, accountability, and public trust.”
👉 Stay ahead of regulatory shifts shaping tomorrow’s mining landscape
Core Keywords: Bitcoin mining, Sichuan hydropower, mining migration, off-grid electricity, regulatory gray zone, seasonal mining cycle, energy cost optimization