A leading polysilicon company in Xinjiang has had illegal proceeds confiscated and been fined by regulators for unlawfully supplying power to virtual-currency mining operations, with the total penalty exceeding 100 million yuan.

A major taxpayer and industry pillar, a company that should have been center stage in green energy, was hit with another heavy penalty for violating rules for Bitcoin. The message is clear: Xinjiang is getting serious.

How a Market Leader Became a Power Middleman

People used to assume that when a company of this size quietly diverted some electricity to mining rigs, the worst outcome would be a slap on the wrist.

This time, regulators had no intention of sparing anyone’s face. The penalty went straight past 100 million yuan.

Why would a polysilicon giant do something like this? The answer is simple: electricity prices.

Xinjiang is one of China’s major energy backstops. Its installed capacity in coal power, wind power and solar is so large that local industry often cannot absorb it all, leading to frequent curtailment of wind and solar power: electricity is generated, but there is no one to use it, so it goes to waste.

In miners’ eyes, that surplus power was real money. Add the fact that several of the world’s top mining rig makers are Chinese companies, putting the hardware close at hand, and that Xinjiang’s electricity prices were among the lowest in China and the world, and the region naturally became, in some people’s eyes, the heart of computing power.

The problem was that miners could not get electricity that cheaply on their own. They needed “middlemen.”

That meant legitimate energy-intensive companies with access to large volumes of cheap industrial power, such as polysilicon plants, aluminum smelters and captive power plants.

A gray-market chain then formed: giants held contracts for industrial power rates, resold that electricity to mining farms, and pocketed the spread. It was a sure-profit trade.

It was like running a legitimate big-box supermarket while secretly opening an underground casino in the backyard, then wiring the supermarket’s discounted electricity into it.

Now that the casino has been raided, the supermarket has to pay the bill.

A penalty of more than 100 million yuan aimed at a market leader has shaken the entire industry chain.

The bigger question is whether this is an isolated case meant to “kill the chicken to scare the monkeys,” or the beginning of a systematic reckoning.

Not a Passing Campaign, but a Sweeping Cleanup

Look at Xinjiang’s recent moves, and it is clear the region is serious.

In 2025, the Xinjiang Uyghur Autonomous Region convened a special work meeting on rectifying virtual-currency “mining.” The meeting conveyed instructions from the region’s top leaders, as well as the Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies and Other Activities, jointly issued by the People’s Bank of China, the National Development and Reform Commission and other departments. The regional cyberspace administration, the region’s higher people’s court, the public security department, the PBOC Xinjiang branch and the Xinjiang financial regulator all issued specific guidance covering lead screening, evidence preservation, case investigation, joint enforcement and technical monitoring.

Urumqi, Changji, Karamay and Hotan reported the risk leads they had already identified and the progress of their handling efforts.

This is not a matter of issuing documents and moving on. Authorities are doing four things in concrete terms: conducting a region-wide sweep with no blind spots.

Regulators have required all localities and departments across the region to carry out full-coverage inspections.

They are not only checking industrial parks. Research institutions operating under signs such as “supercomputing center” or “cloud computing,” and even the corners of captive power plants, all have to go through the filter.

They are cracking down on “insiders” supplying power. The polysilicon leader fined more than 100 million yuan is a textbook example.

Any form of illegal electricity resale is strictly prohibited. Once verified, fines are only the starting point; confiscation of illegal proceeds is the real hammer.

Public reporting is being encouraged with rewards. In remote power-rich areas, mining farms were never truly hidden: the roar of large cooling fans and server rooms lit around the clock looked to locals like walking stacks of cash.

The last room for hidden mining farms to survive has been sealed off by this “mass-line” tactic. The activity has been defined as “to be eliminated,” with no room left.

Virtual-currency mining is backward production capacity and an industry slated for elimination. There are no preferential power rates, no transition window and no room for negotiation. Its legality has been stripped away completely. The enforcement intensity is now plain to see.

But Xinjiang has carried out crackdowns before, and mining farms have reappeared under new disguises. Why is this time different?

This Time Really Is Different

Xinjiang’s energy strategy is shifting from “more electricity than it can use” to “good electricity must be used where it matters most.”

In 2025, Xinjiang’s outbound power transmission continued to rise, and “Xinjiang power transmission” has become a national-level energy corridor, giving every kilowatt-hour a clear destination.

At the same time, high-end manufacturing, new materials, green hydrogen and other industries are accelerating their rollout in Xinjiang, driving rapid growth in electricity demand.

Now there is not enough electricity to go around. Every kilowatt-hour taken by a mining farm is power taken from legitimate industries.

Then there are the hiding tactics: stuffing mining rigs into industrial parks, using the shell of high-energy-consuming industries as cover, building mining farms on slopes beside solar arrays and consuming power directly on site without feeding it into the grid. Some have even moved mining rigs into legitimate data centers, hanging out a sign that says “AI data center.” Unless you walk inside, you would never know whether the roaring fans are running AI computing power or Bitcoin.

These tricks worked in the past because the technology was not up to the task. Now technical monitoring has caught up, and these disguises are becoming increasingly transparent under computing power surveillance.

When every kilowatt-hour in a region is brought into the precise dispatching of China’s national energy map, gray space is squeezed out systematically, rather than being temporarily scared off by one or two penalty notices.

The penalty of more than 100 million yuan is less a punishment of one company than a stamp placed on an entire era.

Xinjiang is turning back from a gold rush ground for miners into what it was meant to be: an energy oasis and a launch point for tokens going global.