Over the past two months, rains in China have caused heavy flooding, which could now threaten Bitcoin mining.
The People’s Republic of China has been going through a winter season since June, full of rains. Now, the floods, which are sweeping everything, are also threatening Bitcoin mining. According to reports, the collapse of the three gorges dam would be imminent.
The rainy season has hit this country particularly hard in the past two months. The authorities of the Asian nation have reported a huge mass of displaced people and billionaires property damage.
It should be remembered that Sichuan is one of the provinces with the highest concentration of Bitcoin mining farms in the world. According to data from the Cambridge University Center for Alternative Finance, in this province alone it occupies 9.66% of the hash power of China.
Winter: from hero to villain for Bitcoin mining
Since the Halving of last May, which coincided with a very low volatility price in the main cryptocurrency, the miners expected a miracle. It should be noted that Bitcoin mining farms in China use equipment considered obsolete.
It means that, after Halving, the blockchain network reward cut per block mined was cut in half, both in BTC and its Fiat equivalents. Those machines, such as the S9, were no longer profitable for mining activity, since the electrical cost began to exceed the profits generated from May.
In this way, the flood season in China, far from being a threat, became a boon for Bitcoin mining back then.
Electricity costs in several Chinese provinces decrease considerably due to surplus hydroelectric power caused by floods. This allowed those who exercise Bitcoin mining to extend the useful life of obsolete mining companies.
An inclement winter
Now, with the increase in the price of Bitcoin, and the rainy season, coupled with a decrease in the difficulty of the network, everything seemed to be idyllic for the business. However, the force of the rains has caused harsh floods that are now threatening the Bitcoin mining centers themselves.
According to local media, the floods are of such magnitude, that they have caused 144.43 million yuan in costs. The number of displaced people exceeds 700,000 among the 26 provinces affected by rainfall.
In addition, reports detail that the number of those affected could amount to 54 million people. Also, the homes destroyed by the floods number 41,000.
It is not the first time that floods pose a threat to Bitcoin mining. In recent years, they have caused damage to important farms.
One of the strongest cases was during the 2018 rainy season, when rainfall destroyed thousands of ASICs. The damage, on that occasion, represented a 30% drop in the global hash rate.
Mining activity concentrated in affected areas
Another important factor in this case is that China occupies, according to estimates, between 50% and 65% of the hash power of Bitcoin mining. Of that percentage, Sichuan province occupies a prominent place.
In that province, the floods are also hitting hard. The media assure that the “Three Gorges” dam is facing an imminent collapse.
Taking the information from the Xinhua news agency as true, the aforementioned dam would be well beyond its capacity. Should a collapse occur, Bitcoin mining could be seriously affected by this flood threat.
This would have a significant impact on the development of the business, since it would affect the hash rate, the difficulty and even the price of the main cryptocurrency, as China is the country where half or more of the mining farms around the world are concentrated.
Data to consider
- As for global hash power, China ranks 50%, according to BitOoda, and 65% according to the Cambridge University Center for Alternative Finance.
- The floods have caused material damage in China, which could amount to 144.43 million yuan.
- In 2018, rainfall caused enormous damage and damaged thousands of machines. The cost was expressed in a 30% drop in Bitcoin’s hash rate.
- According to information from the Xinhua news agency, the water level in the “Three
- Gorges” dam exceeds its risk limit of 30 billion cubic meters of water.
- The “Three Gorges” dam is by far the largest in the world and was completed in 2003.