Author: Liu Honglin
Many people's impression of cryptocurrency "mining" is still stuck in the Bitcoin era of "following the water and grass" - using wind power in the northwest during winter, and hydropower in the southwest during summer. With thousands of machines stuffed into tin houses in the desert, built beside rivers in Sichuan, roaring day and night, consuming electricity like a mountain torrent.
But the reality is that the industry now features more of a "lightweight mining" approach: not relying on hydropower, not venturing into deep mountains, but quietly running a few devices in city office buildings, without the roar of fans or the burnt smell of circuit boards, just silently "calculating" and quietly producing Tokens.
Due to work, Lawyer Honglin often interacts with Web3 project parties, developers, and investors in Shanghai and Shenzhen. Many familiar friends would take me to their offices, pointing at a pile of hardware machines and introducing, "This is our cryptocurrency mining site."
Outside the room are China's most centralized financial centers, bustling with traffic. Inside the room, machines run silently, with no detectable sound or heat changes, supporting decentralized finance and dreams.
This "lightweight mining" approach is actually a state naturally evolved within the industry under high regulatory pressure in recent years. On one hand, constrained by policy risks, large-scale deployment is no longer sustainable; on the other hand, as many new projects abandon the Bitcoin-style PoW route and shift towards lower-power PoS, distributed storage, and edge computing mechanisms, mining's physical form has become "invisible".
From a compliance perspective, this is a typical "unclear" state - the equipment is compliant, the network is compliant, and the running nodes themselves are not illegal, but its revenue method and incentive logic still fall within the cryptocurrency domain. If you say this isn't mining, it doesn't seem entirely disconnected; if you claim it's illegal, it lacks substantial illegal characteristics. This provides the industry with a subtle survival space: continuously running in the gray area, not too big, not too noisy, but indeed still alive.
To truly understand this reality, we must start with China's regulatory path regarding "mining".
As early as May 2021, the Financial Stability and Development Committee of the State Council clearly proposed in a meeting to "crack down on Bitcoin mining and trading activities". Subsequently, a systematic "mine clearing" campaign swept across the country. Traditional "mining areas" like Xinjiang, Inner Mongolia, and Sichuan took the lead, successively issuing power curtailment notices and retiring mining sites. In September of the same year, the National Development and Reform Commission formally listed "virtual currency mining activities" in the "Elimination Category" of the Industrial Structure Adjustment Guidance Catalog, thus establishing the policy direction.
The official reason given was that such activities are "high-energy, high-carbon, and low-contribution", inconsistent with national industrial policies and the "dual-carbon" goals. This characterization had some realistic basis at the time. The PoW mechanism dominated by Bitcoin was indeed a representative of high energy consumption and high density, with electricity usage once exceeding that of some medium-sized countries, and much of this electricity coming from "gray" sources.
However, as the industry's technology evolves, many crypto projects no longer rely on PoW algorithms, instead maintaining networks through PoS, DPoS, distributed storage, and other methods. In such models, required computational resources significantly decrease, and deployment scenarios gradually shift from "suburban tin houses" to "city office buildings". You could call it mining, but it indeed doesn't consume much electricity.
More complexly, AI's development and the surge in computing power demand have transformed some infrastructure originally belonging to the crypto industry into "policy-encouraged objects". Edge computing, distributed storage, and general GPU nodes - technologies once fundamentally part of blockchain applications - are now being "backdoor" taken over by the AI industry. At the computing power and architecture levels, the boundaries between the two are not clear - running an AI training model and running a chain verification node might use the same group of servers, just with different software and targets.
This creates a very realistic problem: the identification logic typically used by regulatory agencies, such as "whether electricity consumption exceeds the standard", "whether equipment is special", "whether deployed in a concentrated area", have almost become invalid today. You can't distinguish which project is doing legitimate AI computing power business, which project is mining Tokens on the side, or which project is doing both. Reality has long worn down the regulatory boundaries.
So often, what we see is not "mining resurrecting", but "it never died, just changed its outfit". You'll see many Web3 projects that superficially focus on AI collaboration and edge node scheduling, but when implemented, are actually running verification logic for a certain chain; some projects claim data security and encrypted computing but are essentially constructing their Token issuance mechanism.
For local governments, this situation is equally tricky. On one side is the central government's clear prohibition of "mining", and on the other, key support for "computing power infrastructure" and "AI large model training". If a project's business model straddles both lines, whether to support it, how to regulate it, and whether it's considered illegal actually lacks a clear answer.
This ambiguous state further leads to many projects in reality adopting a "run if you can, hide if you must" approach, instead breeding a more covert, hybrid, and flexible "underground mining ecosystem". You can't investigate it, can't calculate it clearly - electricity is residential, the space is an office, accounts are compliant, the entity has a license, but it's just calculating a Token. At this point, traditional regulatory logic can no longer keep up.
As a Web3.0 industry legal compliance practitioner, Lawyer Liu Honglin's personal judgment is that among China's "three prohibitions" on cryptocurrencies (ICO, crypto exchanges, crypto mining), if there's any future relaxation, "mining" might be the first to loosen.
Not because of a shift in national attitude, but because "new miners" have already departed from the original definition. It's hard to describe them as "high-energy, low-contribution" anymore. Instead, they might already be the "computing power entrepreneurs" you encourage, holding technology park subsidies, participating in AI competitions, properly registering companies, paying taxes, issuing salaries - with profits generated not just in RMB, but also in globally convertible Tokens.
Moreover, AI and Web3 are increasingly integrated. Many chain teams are actually participating in AI model pre-training, data annotation, or algorithm optimization; many AI enterprises also recognize the efficiency of chain incentive mechanisms in "crowdsourced computing" and "edge participation". At this point, forcibly separating the relationship between Web3 and computing power will only become increasingly unrealistic.
Of course, I'm not saying regulation should be completely relaxed, but rather to acknowledge that the industry's form has indeed changed and cannot be governed by standards from three years ago using five years later's reality. Especially for "ambiguous domains" involving computing power infrastructure and AI service capabilities, the approach might not be total negation, but establishing a "positive list + industry classification" to clarify which behaviors should be included in the data industry, which belong to financial supervision, and which can operate compliantly but must be registered and reported.
Otherwise, if we always equate "mining" with illegal and backward, we'll indeed miss part of the future.
Mining today is not just a compliance issue, nor just an energy issue, but more a question of "how we understand infrastructure evolution". From Bitcoin's "computing power for blocks" to the AI era's "computing power as a resource", what we essentially see is that more and more underlying computing power nodes are becoming universal interfaces for digital society. If the past decade was "whoever mines coins makes money", the next decade will likely be "whoever masters elastic computing power will have industrial initiative".
In this era of increasingly intense global computing power competition, if we cannot establish a mining and computing power integration mechanism that both respects underlying technical paths and can be incorporated into regulatory oversight, we will likely be absent from the next wave of global computing infrastructure competition.
Rather than blocking, it is better to clearly understand its true nature; instead of hiding it, it is better to incorporate it into an open rule system. This can at least allow projects that could have operated in the open to have fewer concerns and less motivation for gray-area operations.
This is precisely a new issue that truly needs discussion.
