China fines polysilicon producer $14.5M for illegally powering bitcoin mining operations

A major polysilicon producer has bagged a 100 million yuan fine, about $14.5 million, after it was discovered that it had been illegally providing electricity to power Bitcoin mining operations.  

Chinese authorities have been making efforts to crack down on illegal mining operations. Companies are now explicitly prohibited from providing services such as internet access or financial support to crypto miners.

Chinese authorities have fined a company for illegal power distribution  

A major polysilicon producer in Xinjiang is set to pay a massive fine of over 100 million yuan (approximately $14.5 million) for supplying electricity to Bitcoin mining operations. Cryptocurrency mining has been banned in the nation since 2021. 

Legal experts consulted by local media stated that the behavior violates China’s Electric Power Law. If the electricity diversion involved bypassing meters or stealing power, it could even be viewed as criminal theft. Aside from the imposed fine, the illegal gains were confiscated.

In early 2026, eight national departments, including the People’s Bank of China (PBOC) and the National Development and Reform Commission (NDRC), issued a joint notice stating that virtual currency-related business activities are illegal financial activities in order to close existing loopholes. 

In regions like Xinjiang, which produces a lot of electricity, energy-intensive enterprises are purchasing electricity at low industrial prices and then secretly selling it to crypto miners to make a profit, affecting the national energy strategy along the way. 

In 2025, Xinjiang’s electricity transmission volume continued to rise, but now the power is designated for high-end manufacturing companies, companies that produce specialized materials for batteries, and green hydrogen projects, like in Xinjiang’s Kuqa city, where solar power is used to produce hydrogen. The hydrogen is then sent to a refinery and even mixed into natural gas for homes. 

The PBOC noted in its February 2026 notice that more people are adopting virtual currencies due to various factors, which pose new challenges for risk control. The central bank stressed that stablecoins and tokenization activities are now also under strict supervision.

Is this the end of the illegal mining market in China?  

Officials in Xinjiang will thoroughly inspect industrial parks and data centers to make sure all mining operations have been shut down. 

Provincial governments are also fully responsible for shutting down any remaining mining projects in their regions. 

The new rules from the authorities restrict companies from providing internet access, marketing services, or financial support to crypto miners. Even companies that manufacture mining machines cannot provide sales services within China. 

A major operation in Xinjiang in December 2025 forced the shutdown of an estimated 400,000 to over 1 million mining machines, causing a sharp drop in the global Bitcoin network hashrate. It fell by as much as 18% in a single day.

Authorities have also banned the issuance of stablecoins pegged to the yuan and prohibited domestic companies from tokenizing real-world assets without approval.

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