Criminal Liability For Illegal Bitcoin Mining In China
1. Legal Framework: Criminal Liability for Illegal Bitcoin Mining in China
Although China has not criminalized possession or ownership of Bitcoin per se, its government has strictly prohibited cryptocurrency mining and trading. The criminal liability mainly arises from violations of energy laws, computer misuse, illegal business operations, or power theft, rather than the mining activity alone.
Main Legal Provisions Involved
Article 264 of the Criminal Law of the People’s Republic of China (PRC): Theft
Applies if miners steal electricity from the state grid or other users.
Theft of a large amount of power for mining constitutes a criminal offense, often punished by imprisonment and fines.
Article 225: Illegal Business Operations
Used when mining is considered an unauthorized business activity that disrupts market order or violates administrative regulations (e.g., bans on crypto mining).
Article 253: Illegal Use of Computer Information Systems
May apply if mining software hijacks or abuses computing systems (common in cryptojacking cases).
Environmental and Energy Regulations
Violations of the “Energy Conservation Law” or “Measures for the Orderly Use of Power” can lead to administrative penalties, which may escalate to criminal prosecution when the violation is serious.
2. Important Case Summaries
Case 1: “Wu Mou et al.” (Inner Mongolia, 2021) — Theft of Electricity Case
Facts:
Wu and several associates set up over 2,000 Bitcoin mining machines in an industrial park in Ordos, Inner Mongolia.
They secretly connected to a nearby factory’s power supply to avoid paying electricity fees.
Over six months, they consumed more than 1.5 million kilowatt-hours of electricity.
Court’s Ruling:
The court found Wu guilty of theft of electricity under Article 264.
Wu was sentenced to three years’ imprisonment, suspended for four years, and fined 100,000 RMB.
Mining equipment and proceeds from Bitcoin sales were confiscated.
Significance:
This case set a precedent that illegal mining powered by stolen electricity directly constitutes criminal theft, not merely a regulatory violation.
Case 2: “Li Mou” (Jiangsu Province, 2019) — Abuse of Power and Energy Theft
Facts:
Li, an employee of a local government information center, installed Bitcoin mining software on 10 office servers.
Over several months, he secretly mined Bitcoin during off-hours using public resources.
The operation increased electricity bills by around 14,000 RMB.
Court’s Ruling:
The People’s Court of Wuxi convicted Li of abuse of power and embezzlement of public resources.
He was sentenced to 1 year and 3 months imprisonment and fined 10,000 RMB.
Significance:
This was one of the earliest cases involving a public employee misusing government equipment for mining.
It demonstrated that mining could lead to disciplinary and criminal consequences, especially in the public sector.
Case 3: “Zhang Mou et al.” (Heihe, Heilongjiang, 2020) — Theft and Illegal Business Operations
Facts:
Zhang and his team operated a large-scale Bitcoin mine with more than 1,000 rigs.
They illegally tapped into the national power grid to reduce costs.
They also ran an online platform renting mining capacity to others.
Court’s Ruling:
Zhang was convicted of theft of electricity and illegal business operations.
He was sentenced to four years in prison and fined 200,000 RMB.
The court ordered confiscation of profits from Bitcoin sales.
Significance:
The case combined theft and illegal business operation charges, showing how the law treats mining as a business violation when it affects market order.
Case 4: “Feng Mou” (Sichuan, 2021) — Violation of Energy Administration Order
Facts:
Feng established a Bitcoin mining farm in a rural area of Sichuan, taking advantage of cheap hydropower.
After the June 2021 national ban, local authorities ordered all crypto mines to shut down.
Feng ignored the order and continued operations secretly at night.
Court’s Ruling:
The local court found that Feng violated national administrative orders and energy regulations.
His actions were deemed an illegal business operation under Article 225.
He was sentenced to three years imprisonment (suspended) and fined 150,000 RMB.
Significance:
One of the first post-ban cases, demonstrating the shift from administrative enforcement to criminal punishment for defying national directives.
Case 5: “Chen and Others” (Guangxi, 2022) — Organized Illegal Business Operation
Facts:
Chen organized a mining operation with over 10,000 ASIC machines across multiple provinces.
He raised funds from investors and promised high returns from Bitcoin mining.
The operation used stolen electricity and evaded taxes.
After the 2021 ban, Chen continued secretly operating.
Court’s Ruling:
The court convicted Chen and associates of organizing an illegal business operation, power theft, and tax evasion.
Main defendant Chen was sentenced to five years imprisonment and fined 500,000 RMB.
Significance:
This large-scale case reflected the government’s crackdown on organized and cross-regional mining operations.
It also showed how financial crimes (tax evasion, fundraising fraud) can be tied to illegal mining.
Case 6: “Sun Mou” (Gansu, 2023) — Cryptojacking (Illegal Control of Computer Systems)
Facts:
Sun infected thousands of computers in an internet café chain with mining malware.
The malware covertly mined Monero and Bitcoin, consuming electricity and slowing systems.
The operator lost nearly 120,000 RMB in electricity costs and hardware damages.
Court’s Ruling:
Sun was convicted under Article 285 for illegal intrusion and control of computer information systems.
Sentenced to three years imprisonment and fined 50,000 RMB.
Significance:
This case didn’t involve traditional mining but cryptojacking.
It showed how Chinese law criminalizes mining-related cyber offenses under computer crime statutes.
3. Summary of Criminal Liability Types
| Type of Offense | Legal Basis | Typical Punishment | Example Case |
|---|---|---|---|
| Theft of Electricity | Art. 264 | 1–5 years imprisonment, fine | Wu (2021), Zhang (2020) |
| Illegal Business Operation | Art. 225 | 3–7 years imprisonment, fine | Feng (2021), Chen (2022) |
| Abuse of Power / Misuse of Public Assets | Art. 382–385 | Up to 5 years | Li (2019) |
| Illegal Control of Computer Systems | Art. 285 | 3–7 years imprisonment | Sun (2023) |
| Violation of Energy Administration Orders | Admin + Art. 225 | Administrative or criminal | Feng (2021) |
4. Conclusion
China’s treatment of Bitcoin mining has evolved from regulatory oversight to criminal enforcement.
While the activity itself (mining) is not defined as a separate crime, miners are often prosecuted through existing legal categories like theft, illegal business operations, and computer misuse.
Since the 2021 blanket ban, courts have increasingly imposed criminal penalties rather than mere administrative fines.
Recent judgments show a consistent stance: any unauthorized or concealed Bitcoin mining that consumes significant energy or violates state policies will likely lead to criminal charges.
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