Article by: Lawyer Liu Zhengyao
Introduction
On February 4, 2026, the beginning of spring. A notice issued by Bùtuō County in Liangshan Yi Autonomous Prefecture, Sichuan Province, titled “Notice on Prohibiting Virtual Currency ‘Mining’ Activities” (hereinafter referred to as the “Notice”), has caused a ripple in the domestic crypto community. Although not many people are paying attention, as a Web3 lawyer, Liu believes this event is quite meaningful. For the general public, virtual currencies may already be a distant “old news,” but for regulators and clandestine virtual currency miners within the country, this notice is more like a precise “mine clearance” operation.
It has been nearly five years since September 3, 2021, when multiple national ministries jointly issued a document to crack down on “mining.” At this point, Bùtuō County, located in the heart of Daliang Mountain, reaffirmed the ban, which is not only a routine extension of the existing mining prohibition policy but also tears open a small part of the stubborn “underground market” for virtual currency mining still existing on the mainland.
01 Content of the “Notice” in Daliang Mountain Bùtuō County
As you can see, the content of this notice issued by Bùtuō County is not long, but the language is quite stern and the directives are clear (for example, “relevant personnel will be jointly investigated for party discipline, political discipline, and legal responsibility”), revealing the local government’s zero-tolerance attitude toward the resurgence of “mining.”
Overall, the core content of the notice covers three dimensions:
First, qualification and consequences. It explicitly classifies virtual currency “mining” as an outdated, eliminated production process by the state, and considers related activities as illegal financial activities. Participants not only face severe sanctions such as “four disconnections” (cutting off loans, power, internet, and credit), but public officials will also be held accountable under party and government discipline.
Second, comprehensive prohibition. The notice clearly bans all forms of mining activities, naming mainstream currencies like Bitcoin and Ethereum, emphasizing that regardless of the “disguise,” as long as the activity involves computationally producing virtual currency, it is under strict crackdown.
Third, social supervision. It establishes a dual regulatory system involving local authorities and industry, requiring electricity and communications departments to conduct strict inspections. Additionally, the notice provides reporting phone numbers and email addresses, aiming to use “mass prevention and control” to make hidden “mining machines” in deep mountains, factories, or residences impossible to conceal.
The reason Bùtuō County chose to speak out again in 2026 largely stems from its unique geographical environment. As a region rich in hydropower resources, it was once a safe haven for “miners.” The issuance of this notice is a further reinforcement of the local government’s “zeroing out” achievements.
02 Review of the “9.3 Notice”: A Turning Point in China’s Mining Industry
To understand Bùtuō County’s actions, one must go back to the autumn of 2021, a pivotal season that changed the fate of the crypto industry. On September 3, 2021, the National Development and Reform Commission (NDRC) and 10 other departments jointly issued the “Notice on Regulating Virtual Currency ‘Mining’ Activities” (commonly known as the “9.3 Notice”). The significance of this document lies in:
(1) Full-chain containment
It banned virtual currency mining, creating a policy closure from investment entry, energy supply, financial support, to industry exit.
(2) End of industry status
The “9.3 Notice” added “mining” to the “elimination” category in the “Guidelines for Industrial Structure Adjustment,” prohibiting new virtual currency mining projects and requiring the gradual withdrawal of existing mining activities. This meant that “mining” lost any legal industrial space in China.
(3) No new growth, clearance of existing
After the notice was issued, large-scale mining farms across Xinjiang, Inner Mongolia, Sichuan, Yunnan, and other regions quickly shut down, with much of the computing power flowing overseas. From a regulatory perspective, the background of the “9.3 Notice” was not only a battle for energy security (supporting carbon peaking and neutrality) but also a financial risk prevention campaign. It officially marked the end of China’s era as the “world’s computing power center” for virtual currencies and ushered in a period of “illegality” for virtual currencies on the mainland.
03 Beneath the Iceberg: The Existing Underground “Hidden Market”
Since virtual currency mining was fully banned five years ago, why does Bùtuō County still reaffirm the ban now? The answer is simple: underground markets still exist and are highly resilient and covert.
In recent years, domestic virtual currency mining has not disappeared entirely but has shifted from “large factories” to “retail miners,” moving from “above ground” to “deep underground.” The characteristics include:
First, guerrilla-style distribution. In remote mountainous areas rich in hydropower like Sichuan and Yunnan, some small hydroelectric stations, driven by profit motives, secretly supply power to small mining farms. Bùtuō County’s ban is a response to this, targeting these hidden “guerrilla teams” in mountain streams and farmhouses.
Second, disguised as “high-tech.” Some companies, under the guise of “big data, cloud computing, supercomputing centers,” exploit policy incentives to fraudulently obtain electricity, while secretly operating mining machines.
Third, small-scale family operations. As noise reduction technology for mining machines improves, some individuals install a few machines in residential buildings, office buildings, or even student dormitories. This dispersed layout greatly increases regulatory costs.
This “wildfire” state is the fundamental reason why regulatory authorities continue to issue reaffirming policies. The Bùtuō County notice reflects that mainland regulation has entered a new stage of “routine inspections” and “targeted cleanups.”
04 What are the legal risks of domestic virtual currency mining?
For those still holding a fluke mentality as “lurkers,” the current legal environment is no longer the “gray area” of the past but is filled with high-voltage lines. For friends involved in mining on the mainland, the risks may include:
(1) Criminal risks: from electricity theft to money laundering
Many underground mining projects, to reduce costs or evade monitoring, resort to illegal wiring, unauthorized modifications to meters, etc. According to China’s Criminal Law, large-scale electricity theft constitutes theft and faces severe criminal penalties.
Some miners’ earnings from mining are exchanged through illegal platforms, which can easily involve money laundering chains. Once identified as assisting in money laundering or illegal financial transactions, the consequences can be severe. There are also criminal risks such as concealing crimes.
(2) Administrative and civil risks: total loss of investment
First, confiscation of illegal gains and equipment. As stated in the Bùtuō County notice, once discovered, all mining hardware (such as ASIC miners, graphics cards) and illegal earnings (the mined coins) will be lawfully confiscated. Given the high value of equipment, this means investors’ assets can be wiped out instantly.
Second, civil legal protection is unavailable. According to the “9.24 Notice” and judicial practice, civil legal actions related to investing in virtual currencies and derivatives are invalid. This means that if you encounter partners fleeing with funds or losses caused by market factors in underground virtual currency mining, courts are unlikely to accept the case, and losses must be borne by yourself.
