The incident took place on Monday at a data centre operated by Innosilicon, according to bitcoin mining expert Marshall Long, who posted pictures of the fire on social media.
Dovey Wan, a founding partner at cryptocurrency firm Primitive Ventures, estimated that the total cost of the damage was around $10 million (£8.1m).
Other mining experts speculated that the loss to the bitcoin mining network may have helped contribute to bitcoin's recent price resurgence, which has seen its value rise by more than $500 over the last 24 hours.
Innosilicon has not confirmed that the fire took place at its facilities and did not respond to a request for comment from The Independent.
Bitcoin mining is the process of generating new units of the cryptocurrency by solving complex mathematical problems. It requires vast amounts of computer processing power and is therefore extremely energy intensive.
Recent estimates suggest that the mining network that supports bitcoin uses as much energy as the entire nation of Ireland and some scientists claim it has put the world on the brink of an environmental disaster.
A 2018 study published in Nature Climate Change found that the carbon emissions produced by the vast energy demands of bitcoin could push global warming above 2C in just two decades.
While clean energy mining solutions do exist, such as in Iceland and Norway, the majority of operations are based in China, where coal-generated electricity is cheap.
China claims to be cracking down on unlicensed cryptocurrency mining operations, however it is not clear what measures are being taken.
In August, another significant mining operation in the country suffered a catastrophe when the Poolin mining farm was destroyed by floods in the Sichuan province.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies