Mining has not died; it has simply changed its appearance.

Written by: Liu Honglin

Many people's impressions of cryptocurrency "mining" are still stuck in the era of Bitcoin, where miners "followed the water and grass"—using wind power in the northwest during winter and hydropower in the southwest during summer. Thousands of machines crammed into metal houses in the desert, built by rivers in Sichuan, roaring day and night, consuming electricity like a mountain flood.

But the reality is that what we see more in the industry now is a form of "lightweight mining": not relying on hydropower, not going deep into the mountains, but quietly operating a few devices in office buildings in the city, without the roar of fans or the smell of burnt 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 take me to visit their offices, pointing to a pile of hardware machines, introducing, "This is our cryptocurrency mining farm."

Outside the room is China's most centralized financial center, bustling with traffic. Inside the room, machines are running silently, with no audible sound and no noticeable heat changes, supporting decentralized finance and dreams.

This form of "lightweight mining" is actually a state that has naturally evolved within the industry under high regulatory pressure in recent years. On one hand, due to policy risks, large-scale deployments are no longer sustainable; on the other hand, as many new projects have abandoned the Bitcoin-style PoW route in favor of lower-power PoS, distributed storage, and edge computing mechanisms, the physical form of mining itself has become "invisible."

From a compliance perspective, this is actually a typical "invisible" state—devices are compliant, networks are compliant, and the operation nodes themselves are not illegal, but their profit models and incentive logic do indeed belong to the realm of cryptocurrency. If you say this is not mining, it seems you cannot completely dismiss it; if you say it is illegal, it lacks substantial illegal characteristics. This gives the industry a subtle space for survival: operating continuously in a gray area, neither too big nor too small, neither noisy nor quiet, 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 Development Committee of the State Council explicitly stated in a meeting: "We must crack down on Bitcoin mining and trading activities." Subsequently, a systematic "cleaning of mines" action was launched nationwide. Traditional "mining areas" such as Xinjiang, Inner Mongolia, and Sichuan were the first to respond, successively issuing power restriction notices and shutting down mining farms. In September of that year, the National Development and Reform Commission officially included "virtual currency mining activities" in the "elimination category" of the "Guidance Catalog for Industrial Structure Adjustment," thus establishing the policy direction.

The official reason given is that such activities "consume a lot of energy, produce high carbon emissions, and contribute little," which does not align with national industrial policies and "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 consumption at times surpassing that of some medium-sized countries, much of which came from "gray" power sources.

However, as industry technology has evolved, many cryptocurrency projects no longer rely on PoW algorithms but instead maintain networks through PoS, DPoS, distributed storage, and other methods. The computing resources required in this model have significantly decreased, and deployment scenarios have gradually shifted from "suburban metal houses" to "urban office buildings." You can say it is mining, but it indeed consumes very little electricity.

More complex is the rapid rise in AI development and computing power demand, which has turned some underlying facilities originally belonging to the cryptocurrency industry into "policy-supported objects." Edge computing, distributed storage, and general-purpose GPU nodes, which were once the infrastructure for blockchain applications, are now being "acquired" by the AI industry. Moreover, at the level of computing power and architecture, the boundaries between the two are inherently unclear—running an AI training model and running an on-chain verification node may use the same set of servers, just with different software and goals.

This leads to a very practical problem: the identification logic that regulatory agencies are accustomed to using, such as "is the electricity consumption excessive," "are the devices special," and "are they deployed in concentrated areas," has almost become ineffective today. You cannot tell which project is engaged in legitimate AI computing business, which project is using a shell to mine Tokens, and which project is doing both. Reality has long since blurred the regulatory boundaries.

So many times, what we see is not "mining is resurrecting," but rather "it never died; it just changed its appearance." You will see many Web3 projects that superficially focus on AI collaboration and edge node scheduling, but when implemented, they are still running the verification logic of a certain blockchain; some projects claim to focus on data security and encrypted computing, but in reality, they are just building their own Token issuance mechanisms.

For local governments, this situation is equally tricky. On one hand, there is a clear prohibition from the central government on "mining," while on the other hand, there is strong 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 constitutes a violation, there is actually no clear answer.

This ambiguous state further leads to many projects in reality "running if they can, hiding if they can," which instead fosters a more concealed, mixed, and flexible "underground mining ecosystem." You cannot check it, cannot calculate it, the electricity is residential, the space is an office, the accounts are compliant, and the entities have licenses, but it is still calculating a Token. At this point, if you apply traditional regulatory logic, it is already out of date.

As a legal compliance practitioner in the Web3.0 industry, lawyer Honglin's personal judgment is that among China's "three prohibitions" policies regarding cryptocurrency (ICO, cryptocurrency exchanges, cryptocurrency mining), if there is indeed room for relaxation in the future, the first to loosen may be "mining."

Not because of a shift in national attitude, but because "new miners" have already deviated from the original definition. It is difficult to describe them as "high energy consumption, low contribution" anymore. On the contrary, they may already be the "computing power entrepreneurs" you encourage, receiving subsidies from technology parks, participating in AI competitions, and legitimately registering companies, paying taxes, and issuing salaries, with profits generated not only in RMB but also in globally convertible Tokens.

Moreover, the integration of AI and Web3 is becoming increasingly close, with many blockchain teams actually participating in AI model pre-training, data labeling, or algorithm optimization; many AI companies also realize that on-chain incentive mechanisms are more efficient 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 am not saying that regulation should be completely relaxed, but rather that we must acknowledge that the form of this industry has indeed changed, and we cannot use standards from three years ago to govern the reality of five years later. Especially in "ambiguous areas" involving computing power infrastructure and AI service capabilities, what may be needed is not a complete denial but rather a "positive list + industry classification" approach to clarify which behaviors should fall under the data industry category, which behaviors belong to financial regulatory objects, and which behaviors can operate compliantly but must be registered and reported.

Otherwise, if we always equate the term "mining" with illegal and backward, we will indeed miss out on a part of the future.

Mining today is not just a compliance issue, nor just an energy issue; it is also a question of "how we understand the evolution of infrastructure." From Bitcoin's "computing power for blocks" to the AI era's "computing power as a resource," what we are essentially seeing is an increasing number of underlying computing power nodes becoming universal interfaces for the digital society. If the past decade was about "who can mine coins makes money," then the next decade will likely be "who masters flexible computing power will have industrial initiative."

In this era of increasingly heated global competition for computing power, if we cannot establish a set of mining and computing power integration mechanisms that respect underlying technical paths and can be included in regulatory perspectives, we may very well be absent in the next wave of global computing power infrastructure competition.

Rather than blocking it, it is better to see its true nature clearly; rather than hiding it, it is better to incorporate it into an open rule system. This way, at least those projects that could operate in the sunlight will have fewer concerns and less motivation for gray operations.

This is indeed a new issue that needs to be discussed.

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