Xinjiang mining machines suddenly lose power, 13 departments crack down on virtual currency, the aftermath of the meeting is still ongoing

The coordination mechanism meeting held by the central bank to combat virtual currency trading and speculation marked the beginning of a large-scale cleanup of mining farms in Xinjiang in half a month.

Overnight, Xinjiang, once regarded by miners as a power paradise, fell into silence. Between December 14 and 15, a large number of mining farms in major mining gathering areas such as Changji and Hami were suddenly cut off from power, forcing approximately 400,000 mining machines offline.

The total network hash rate of Bitcoin plummeted by about 10% within 24 hours, with the largest single-day decline reaching 18%, the biggest weekly drop since June 2022, causing unusual tremors in the heart of the cryptocurrency market.

400,000 mining machines shut down

It is understood that many mining farms had already received official notices forwarded by the National Development and Reform Commission (NDRC) at the beginning of the month, requiring them to “report mining activities to the NDRC as per the central bank’s requirements.”

Multiple sources confirm that during December 14 to 15, mining farms in major gathering areas such as Changji and Hami in Xinjiang were asked to suspend operations. Reports indicate that most mining machines were suddenly powered off.

According to Kong Jianping, founder of Nano Labs, considering the recent significant decline in total network hash rate (a 17.25% drop last week), it is estimated that about 400,000 Bitcoin mining machines in Xinjiang, China, have been shut down recently.

Regulatory Storm Approaching

Unlike previous temporary power restrictions caused by electricity shortages, this shutdown is an organized regulatory action.

There are rumors that “it’s not just power restrictions, but direct power cuts, even preventing backup power sources from being turned on.” This all-or-nothing approach demonstrates the determination behind this operation.

The regulatory stance has escalated from the central bank acting alone to a joint effort involving the central bank, the NDRC, and the Central Financial Office. On November 28, the People’s Bank of China held a meeting of the virtual currency trading and speculation crackdown coordination mechanism, attended by responsible officials from 13 departments, including the Ministry of Public Security, the Cyberspace Administration, and the Central Financial Office.

The lineup of this meeting sends an important signal. Compared to the ten-department notice in 2021, two heavyweight departments— the Central Financial Office and the National Development and Reform Commission— were added. The Central Financial Office, as China’s highest authority in financial management, indicates that virtual currency issues have been elevated to the level of national financial security.

The involvement of the NDRC directly hits the core of the mining industry. As the authority controlling industrial development directions, energy consumption, and economic security, its participation signifies that the original sin of virtual currencies is now explicitly recognized as a systemic risk threatening national economic security, energy security, and industrial security.

The meeting communiqué also explicitly states: “Stablecoins are a form of virtual currency that currently cannot effectively meet requirements for customer identification, anti-money laundering, and other aspects, and pose risks of being used for money laundering, fundraising scams, and illegal cross-border fund transfers.”

Signals of normalized regulation

This regulatory action particularly targets Xinjiang, due to its special status in China’s Bitcoin mining landscape. Although mining was fully banned in 2021, China’s Bitcoin hash rate and costs have quietly rebounded to about 21% of the global total, ranking among the top in the world, with Xinjiang contributing significantly.

Xinjiang’s status as a “mining hub” benefits from its energy advantages: abundant coal power, wind power, and photovoltaic resources, as well as local electricity surpluses caused by high transmission costs, allowing electricity prices as low as 0.1-0.15 yuan per kWh. These energy conditions have attracted many mining farms to operate disguised as data centers or supercomputing centers.

Compared to the cleanup in 2021, this time’s action is more mechanized and normalized. The 2021 cleanup was mainly based on phased requirements from the State Council, whereas this time a cross-departmental coordination mechanism has been established, indicating that regulation will become a norm.

Another key difference is the depth of regulation. After 2021, some mining farms continued operations by disguising themselves as big data centers, but after this meeting, the scope of regulation has been fully expanded—from financial transactions to energy use—forming a comprehensive chain of oversight.

As the meeting pointed out, “Recently, influenced by multiple factors, virtual currency speculation and trading have shown signs of resurgence, and related illegal activities occur from time to time, posing new risks and challenges for risk prevention and control.”

For Chinese miners, this means the next wave of migration will be more dispersed, more covert, and more socketed. When truly clean energy technologies and energy internet breakthroughs are achieved, Bitcoin mining may finally realize true decentralization.