China’s Sichuan Province Shuts Down Bitcoin Mining Operations in Sweeping Crackdown

The cryptocurrency mining industry faced a seismic shock on June 21, 2021, as China’s southwestern Sichuan Province ordered the immediate shutdown of Bitcoin mining operations, effectively crippling more than 90% of the country’s total mining capacity. The dramatic move sent Bitcoin prices tumbling below $32,000 for the first time in two weeks and triggered a broader market selloff that erased billions from the total cryptocurrency market capitalization.

TL;DR

• Sichuan authorities ordered all Bitcoin mining operations to halt by Sunday, June 20, 2021
• More than 90% of China’s Bitcoin mining capacity has been shut down, representing roughly one-third of global processing power
• Bitcoin dropped to $31,760, its lowest level since June 8, 2021
• Ethereum fell approximately 12%, trading around $1,888
• The People’s Bank of China pressured Alipay and major banks to crack down on crypto trading

The Sichuan Shutdown

On Friday, June 18, the Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau issued a joint notice ordering local electricity companies to screen, clean up, and terminate mining operations by Sunday, June 20. The directive specifically named 26 firms that had been inspected and reported as potential cryptocurrency mining enterprises, including Heishui Kedi Big Data Tech Co and Kangding Guorong Tech Co.

Electricity companies were instructed to immediately stop supplying power to any crypto mining projects they detected, conduct self-inspection and rectification, and report their findings by the following Friday. The notice also banned local authorities from approving any new mining projects.

Sichuan had been considered one of China’s most crypto-friendly regions due to its abundant hydropower resources, particularly during the rainy season. Many industry participants had hoped that local regulators might take a softer approach compared to other provinces. Those hopes were decisively crushed.

Market Carnage

The immediate market impact was severe. Bitcoin fell as low as $31,760 on Monday morning before partially recovering to trade around $32,472 by the afternoon — still an 8% decline on the day. Ethereum suffered even steeper losses, dropping approximately 12% alongside XRP. Dogecoin, the meme-inspired cryptocurrency that had captivated retail investors, fell to around $0.25, a far cry from its May peak above $0.70.

The total cryptocurrency market capitalization contracted sharply, with CoinMarketCap data showing BTC at $31,676 and ETH at $1,888 on June 21. The selloff extended a weeks-long downtrend that had begun when China first announced its broader crackdown in May 2021.

A Coordinated Regulatory Assault

The Sichuan action was not an isolated event. The People’s Bank of China separately announced on Monday that it had summoned Alipay — the massive payments platform operated by Alibaba affiliate Ant Group — along with several major state-owned banks, urging them to crack down on cryptocurrency trading. This directive reinforced China’s existing prohibition on financial institutions providing crypto-related services.

The Sichuan crackdown followed similar moves in Inner Mongolia, Yunnan Province, and the Xinjiang Uygur Autonomous Region. Together, these regions represented the backbone of China’s Bitcoin mining industry, which had previously accounted for more than half of the global hash rate.

Mining Pools Feel the Pain

Chinese-operated mining pools experienced dramatic declines in their computational power. According to reports, major pools including Huobi Pool, Binance Pool, and AntPool saw their real-time hash rates plunge between 20% and 40% within a 24-hour period. The network-wide hash rate dropped significantly from its all-time high of approximately 180 million terahashes per second reached in May 2021 to around 129 million by late June.

For miners who had invested heavily in specialized hardware and infrastructure, the shutdowns were devastating. A Sichuan-based industry insider, speaking on condition of anonymity, told the Global Times that the exit window was rapidly closing and that miners were scrambling to find overseas hosting facilities for their equipment.

The Great Miner Migration

With more than 90% of China’s mining capacity going offline, industry observers anticipated a massive migration of mining operations to countries with favorable regulatory environments and affordable electricity. North America, particularly the United States and Canada, emerged as primary destinations, along with Russia and Kazakhstan.

However, the transition was not expected to be seamless. Mining equipment prices were projected to fall sharply as many operators looked to sell their hardware quickly, while market appetite for absorbing the oversupply remained uncertain. The disruption also hammered upstream suppliers who had built their businesses around serving China’s once-thriving mining ecosystem.

Why This Matters

The June 2021 Chinese mining crackdown represented one of the most significant structural shifts in Bitcoin’s history. For years, China had dominated global Bitcoin mining, and the sudden removal of that capacity forced a fundamental reorganization of the network’s security infrastructure. While the hash rate decline raised temporary concerns about network vulnerability, it also accelerated the geographic decentralization that Bitcoin advocates had long argued was necessary for the network’s long-term resilience. The event underscored the regulatory risks that continue to shadow the cryptocurrency industry and highlighted the importance of distributed infrastructure for maintaining blockchain networks.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk, and readers should conduct their own research before making investment decisions.