The Paradox of Chinese Mining: Analysis of the Reasons for Maintaining Leadership after the Official Ban of the Industry

Abstract

The fact that China, despite the official ban on cryptocurrency mining introduced in 2021, continues to hold global technological and manufacturing supremacy in this domain represents a paradoxical phenomenon that calls for thorough theoretical examination. Aim and tasks. The primary purpose of this study is to identify the underlying reasons that enable China’s mining industry to retain its leading position in spite of the imposed restrictions. To accomplish this, the work consistently addresses several interconnected tasks: it determines the set of factors that allow domestic companies to dominate the ASIC miner market; it assesses the extent to which Chinese manufacturers continue to influence global computing power even after its relocation to other jurisdictions; it unpacks the institutional tensions embedded within the state’s regulatory approach; and it explores the role played by informal business networks (guanxi) alongside the adaptive strategies adopted by enterprises, which have increasingly pivoted toward exports and adjacent high-tech sectors. Methods. The research employs an interdisciplinary framework that integrates economic, institutional, and sociocultural analytical perspectives; the empirical foundation draws on data concerning the cross-border movement of computing resources and on expert assessments of how informal practices contribute to the sector’s resilience. Results. The findings indicate that the 2021 prohibitive measures triggered a structural reconfiguration of the industry rather than its elimination — the market became concentrated in the hands of major corporations possessing sufficient resources for global operations; at the same time, China’s technological autonomy in semiconductor manufacturing, combined with the flexibility inherent in its cultural practices, enables the transformation of regulatory obstacles into additional competitive assets on international markets, and the “superposition” effect — where a formal ban coexists with de facto industry expansion — is fully borne out by the case under examination. Conclusions. Attempts to account for the endurance of China’s technological leadership under conditions of an official ban solely through the lens of administrative or market logic inevitably fall short of capturing the full picture; the reality is that Beijing pursues a dual-track policy, coupling tough regulatory rhetoric with pragmatic support for domestic producers, which in turn ensures long-term industrial stability and economic viability. The future trajectory of this paradox will be shaped by three critical variables: the success of digital yuan adoption, the outcome of the technological race in semiconductor production, and the generational shift within the entrepreneurial community, where the cohort that traditionally relied on personal connections is gradually being replaced by a new wave of managers.