Xinjiang Bitcoin mining has completely shut down! China's hash rate has evaporated by 8%, while the US is reaping the benefits

Bitcoin network hash rate has experienced its steepest decline since the halving in April 2024, with the 30-day simple moving average (SMA) hash rate plummeting from approximately 1.1 ZH/s to just above 1 ZH/s. Former Canaan CTO Kong Jie revealed on the X platform that up to 400,000 mining machines have recently ceased operation in Xinjiang, China, resulting in a hash rate drop of about 100 EH/s, an 8% decrease.

The Chain Reaction of 400,000 Mining Machines Stopping

The large-scale shutdown of Bitcoin mining in Xinjiang is not an isolated event but a continuation of China’s ongoing crackdown on crypto mining policies since 2021. Xinjiang was once one of the world’s largest crypto mining centers, attracting many mining farms due to abundant coal and wind power resources and relatively low electricity costs. However, the Chinese government has gradually tightened regulations on mining activities citing energy consumption and financial risks, ultimately causing mining operations in Xinjiang to shut down one after another.

The closure of 400,000 mining machines is extremely rare in Bitcoin mining history. For example, current mainstream miners like the Ant S19 series cost about $2,000 to $3,000 per unit, so 400,000 units imply a total investment of $8 billion to $12 billion. The sudden halt of these devices not only signifies a loss of hash rate but also represents billions of dollars in capital being left idle and miners’ income zeroed out.

A hash rate decrease of 100 EH/s will temporarily impact Bitcoin network transaction speed and security. Hash rate measures the total computational power securing the network, and a decline in hash rate means slower transaction verification and block production. However, this impact is short-term because the Bitcoin network has a difficulty adjustment mechanism. According to Glassnode data, Bitcoin mining difficulty is currently expected to decrease by about 3%, providing a short-term income relief for remaining miners.

Three Major Impacts of Xinjiang Hash Rate Collapse

Short-term Network Security Pressure: An 8% decline in hash rate reduces the theoretical cost of a 51% attack, but it remains far above practical feasibility.

Difficulty Adjustment as a Buffer: The expected 3% decrease in difficulty will lower mining difficulty for remaining miners, increasing unit hash rate earnings.

Global Hash Rate Reshaping: China’s share may further decrease from 14%, benefiting North American and Middle Eastern mining farms.

Rise and Fall of China’s Mining Landscape and US Benefits

Kong Jie’s comment was made roughly one month after China re-emerged as the world’s third-largest Bitcoin mining center, with data showing China accounted for about 14% of global hash rate at that time. This figure is surprising considering that since China announced a comprehensive ban on crypto mining in 2021, the market generally believed that China’s mining activities had disappeared. However, in reality, many mines went underground or migrated to regions with less regulation to continue operations.

Xinjiang’s geographic and resource advantages have made it a natural hub for mining activities. The region has abundant coal and wind power resources, and electricity prices are relatively low within China. However, this recent large-scale shutdown could be driven by multiple factors: ongoing pressure from central government, increased enforcement by local authorities, or seasonal energy supply adjustments. Regardless of the reason, the closure of 400,000 machines marks another heavy blow to Bitcoin mining in China.

Kong Jie hinted that “the US benefits without direct intervention,” a view with notable geopolitical implications. When China’s hash rate drops sharply, North American mining farms naturally gain a larger share of the network and mining revenue. Currently, the US is the world’s largest Bitcoin mining country, holding about 35% to 40% of global hash rate. The shutdown of Xinjiang’s mines further consolidates America’s dominant position, which is positive for Bitcoin’s decentralization but also poses geopolitical risks due to excessive concentration of hash power in a single country.

Miners now face tough choices: either relocate equipment to countries like Kazakhstan or Russia that still accept mining, incurring high logistics and redeployment costs; or sell off equipment and exit the market, accepting capital losses. Large-scale migration of mining machines will take time, and the next few months are likely to see a transition period of hash rate redistribution, during which hash rate may remain at lower levels until migration is complete.

Mining Revenue Crisis and Difficulty Adjustment as a Buffer

(Source: Glassnode)

This hash rate collapse occurs amidst a backdrop of persistent downward pressure on miner revenues. The hash price (revenue per unit of hash rate) hovers around $37 per TH/s per second, reaching a five-year low. In this low-revenue environment, only miners with extremely low electricity costs or fully depreciated equipment can remain profitable; many with older equipment or higher electricity rates face losses.

Glassnode data shows Bitcoin mining difficulty at 148.2 trillion (T), just below its all-time high. The difficulty adjustment mechanism is an intrinsic feature of the Bitcoin protocol, which automatically adjusts every 2016 blocks (about two weeks) to maintain an average block time of 10 minutes. When hash rate decreases, difficulty is adjusted downward accordingly, making it easier for remaining miners to find blocks. The anticipated approximately 3% difficulty reduction will provide a short-term easing of miner income, but it is far from enough to offset the pressure from five-year lows in hash price.

In the long run, hash rate is expected to gradually stabilize. As miners relocate to other regions or deploy new mining machines, the global hash rate will rebalance. Mining farms in North America, the Middle East, and Central Asia may absorb part of the displaced hash power, but this process will take months. During this transition, the Bitcoin network will operate with lower hash rate, but thanks to the difficulty adjustment mechanism, transaction processing and network security will not be substantially threatened. The shutdown of Xinjiang mines once again demonstrates that geopolitical risks in Bitcoin mining persist, and decentralization of hash rate distribution remains a key challenge for the network’s long-term security.