On February 4, 2026, the government of Butuo County in Liangshan Prefecture, Sichuan province, issued a notice again banning all forms of virtual currency crypto mining. The county said the move was intended to implement China’s nationwide ban on crypto mining, in force since 2021, and to prevent financial risks while advancing energy conservation and emissions reduction.

After Butuo County issued a rectification notice in June 2025, local authorities have now again used explicit language to impose a blanket ban on crypto mining.

From “Rectification” to “Prohibition,” the Language Tightens

On June 3, 2025, Butuo County and Yuexi County in Liangshan Prefecture, Sichuan, issued notices on the same day banning all forms of virtual currency crypto mining. The two notices used identical wording, defining the activity as “an outdated production process and illegal financial activity explicitly ordered to be eliminated by the state.” Violators would face loan cutoffs, power cuts, internet disconnection and legal accountability.

Even under the ban, however, underground crypto mining has not disappeared.

According to professional analysis, some operators have moved “deep underground,” using electricity from small hydropower stations in remote mountainous areas of Sichuan to run guerrilla-style crypto mining operations.

That may have led some mining farm owners to hold unrealistic expectations about undisclosed power supply agreements signed with local small hydropower stations.

On February 4, 2026, Butuo County issued another “Notice on Prohibiting Virtual Currency Crypto Mining Activities.”

The two bans came eight months apart. Industry observers view the latest restatement as a zero-tolerance response to the resurgence of underground crypto mining, and as a sign that regulation has entered a new phase of routine inspections and targeted removals.

This makes clear that any form of crypto mining, including mining farms relying on such private agreements, falls within the scope of the crackdown. Related investments and civil legal acts will not be protected, and any losses incurred must be borne by the parties themselves.

Regulatory Technology Upgrades as Inspections Intensify

Since September 24, 2021, when the National Development and Reform Commission and 10 other departments jointly issued the “Notice on Rectifying Virtual Currency Crypto Mining Activities” and formally classified crypto mining as an industry to be eliminated, domestic mining activity has largely moved underground or overseas. Liangshan in Sichuan, with abundant hydropower resources and cheap electricity during the rainy season, was once a major cluster for mining farms.

But according to public reports, regulators have now built a multi-agency, full-chain governance network: market regulators inspect business registrations, power authorities monitor abnormal electricity use, telecom regulators check crypto mining network traffic, and the financial system tracks unusual capital flows.

With integrated big-data analysis, suspected mining farms can be quickly identified.

One mining farm operator said: “Liangshan’s small hydropower stations are key monitoring targets, and the regulatory net is very tight.” But he also said some people are still taking risks, driven by high profits.

As a result, crypto mining activity has become more dispersed and concealed, making enforcement more difficult.

Notably, some crypto mining projects had previously operated under the cover of cloud computing, data centers and similar labels. These have now been listed as key crackdown targets.

Policy Context: Energy Controls and China’s “Dual Carbon” Goals

From a policy logic perspective, this round of rectification is driven not only by financial risk prevention, but also by the rational allocation of energy resources.

According to the National Development and Reform Commission’s earlier “Notice on Rectifying Virtual Currency Crypto Mining Activities,” virtual currency crypto mining is an industry slated for elimination because it consumes large amounts of energy and contributes little to the real economy.

Under China’s “dual carbon” goals, local governments have become increasingly unwilling to tolerate projects with high energy consumption and low output.

Some localities once viewed mining farms as a channel for absorbing curtailed hydropower and unused electricity. But as regulatory policy has tightened, that room for maneuver has largely closed. Industry sources said the vast majority of Bitcoin mining farms in Xinjiang have already shut down.

Mining Rig Assets May Face Depreciation Risk

For operators still waiting on the sidelines, the latest notice sends a clear signal.

On one hand, the local government has explicitly said “losses are yours,” meaning future rights-protection efforts are likely to be difficult.

On the other hand, if mining rigs sit idle because of power cuts or seizures, their residual value will shrink sharply.

According to data from second-hand mining rig trading platforms, resale prices for some mainstream mining rig models have fallen by more than 60% from their peak.

Industry insiders said that if overseas operating sites cannot be found, these machines may ultimately be disposed of only at scrap-metal prices. As of publication, the number of similar notices remains limited, but multiple industry participants said they expect more regions to follow.