The cumulative hashing power dedicated toward Bitcoin took a hit this week after extensive flooding of mining centers in Sichuan, China. Eric Meltzer, a partner at China-based blockchain focused fund INB, published a tweet on June 29, 2018, depicting mining hardware destroyed by flooding within the Sichuan region:
Rumors that a huge flood in Sichuan took out a bunch of BTC mines pic.twitter.com/X6jNeAVDWm
— Eric Meltzer (@wheatpond) June 29, 2018
Bitcoin Hashrate Takes a Dive
Chinese meteorological authorities released a public warning of heavy continuous rainfall earlier this week, predicting heavy economic losses. According to a statement issued by the Ministry of Water Sources, storms struck 48 cities and districts within Sichuan and Shandong, overall affecting over 250,000 people, and causing estimated economic losses of $111 million.
Data released later in the week by the Chinese State Flood Control and Drought Relief Headquarters states that the flooding across Tuesday, June 26 and Wednesday, June 27 affected over 91,000 people in six cities. This corresponding to a measurable drop in Bitcoin hashing power as it dropped from 43 million TH/s to 30 million in just 24 hours.
Mining Hardware Gore Horrifies Crypto Community
Chinese cryptocurrency news platform Golden Finance (金色财经) published an update on June 30, stating that the flooding in Sichuan led to the loss of tens of thousands of mining devices that are impossible to repair.
Images of the flood impact on Twitter demonstrate the extent of the damage as mining farm operators attempting to recover lost mining equipment:
— 中国住み (@livein_china) June 29, 2018
The Sichuan region where the flooding occurred has been referred to as the Bitcoin mining capital of China, primarily due to abundant hydroelectric power and a cool climate. The close proximity of mining operations to streams within the mountainous region, however, places mining farms at risk of flooding.
Mining on the Rise in China as Regulatory Stance Softens
The low cost of energy in China catalyzed a surge in mining activity over the last two years, with energy retailers and wholesalers participating in the crypto mining ecosystem. Cryptocurrency angel investor Chandler Guo commented on the rise of energy company-driven crypto mining in China during an interview with ether.camp:
“Today, the energy companies are jumping on the Bitcoin mining business. Before that, we bought electricity from them to mine Bitcoin. Today, the seller who is selling electricity to us, they’re mining Bitcoin by themselves.”
The People’s Bank of China issued a public statement at the beginning of 2018 in order to squash rumors of a potential regulatory shutdown of Bitcoin mining activities, resulting in the rapid proliferation of mining operations within the country.
More than 70% of the currently available hashing power directed at Bitcoin is currently located in China, making the country a major player in the international cryptocurrency ecosystem.
Cover Photo by Jasper van der Meij on Unsplash
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