China once dominated bitcoin mining with over 65% of global hash rate in 2020. The 2021 crackdown disrupted operations, causing a sharp 50% in network power. Miners adapted quickly, revealing the policy's limited long-term impact.
The 2021 Crackdown Explained
Beijing intensified regulations in 2021, targeting energy use and financial risks. Provinces shut down facilities, forcing miners to halt activities abruptly.
This move aimed to curb speculation in the crypto . It extended to trading bans, affecting centralized finance platforms.
According to Reuters, the ban led miners to flee overseas, reshaping global distribution. Hash rate plunged from 180 EH/s to around 90 EH/s initially.
Yet, recovery began within months as operations migrated. The network never faltered, maintaining 100% uptime.
Why Early Claims Overstated the Impact
Experts predicted lasting damage to bitcoin's security. Instead, decentralization strengthened as U.S. and other regions absorbed capacity.
Cambridge data shows China's share fell to zero briefly but rebounded to 14% by 2025. Underground mining persisted despite restrictions.
Ari Paul noted the crackdown addressed centralization risks in mining hardware. This migration diversified the ecosystem.
bitcoin's dipped 30% in 2021 but rallied back. volatility eased as supply chains adjusted.
In CeFi, exchanges faced hurdles but users shifted to offshore platforms. trading, less tied to mining, saw minimal direct effects.
Recent 2025 Developments
Xinjiang's shutdown idled 400,000 rigs, cutting 8% of global hash rate. This echoed 2021 but with smaller scale.
Per The Block, difficulty adjusted downward, the largest drop since the ban. Miners sold holdings, adding short-term pressure.
China's resurgence ranks it third globally, defying the crackdown. Surplus power regions host hidden operations.
Daniel Batten highlighted environmental concerns driving policies, yet global mining grew greener elsewhere.
market Ripple Effects on CeFi and NFTs
The ban influenced CeFi by banning transactions, yet Chinese investors earned $1.15 billion in 2023 gains. VPNs enabled continued participation.
markets shifted focus to regions like the U.S., boosting innovation outside China. Overall crypto market cap recovered, hitting new highs.
Forced selling from miners impacted spot prices recently. Institutional buying countered this, stabilizing the broader market.
Saifedean Ammous observed the devastating blow to miners but quick adaptation.
Anthony Pompliano called it the largest state attack, yet bitcoin prevailed.
Lessons for Crypto Resilience
The episode underscores 's antifragility against regulatory shocks. It educates investors on diversification in mining and trading.
Understanding these dynamics aids navigation of CeFi platforms and trends amid market shifts. This history informs future policy responses globally.
