• 6 hours Bankruptcy Is The Only Choice For Many Retailers
  • 9 hours Are Copper Naysayers Missing The Big Picture?
  • 12 hours Jerome Powell's Impossible Challenge
  • 1 day Economists Call For Recession In 2021
  • 1 day Hong Kong Billionaire Loses Big On Canadian Energy Play
  • 2 days Trade Tensions Weigh On South Korea, Japan Relations
  • 2 days Lithium Hype Can't Live Up To Supply Realities
  • 3 days Tesla Scrambles To Salvage Its Stumbling Solar Business
  • 3 days Why Silicon Valley Is Moving To Toronto
  • 3 days Hong Kong Residents Are Fleeing To Taiwan At A Record Pace
  • 4 days Trickle Down Tax Cuts Aren't Helping Bolster GDP Growth
  • 4 days Wealth Gap Widens Between Baby Boomers And Millennials
  • 4 days How Investors Are Playing Uncertain Markets
  • 5 days Demand For Cash Is On The Rise
  • 5 days The Best Way To Ride The Gold Rally
  • 6 days Corn Industry Reeling After Shocking Ethanol Decision
  • 6 days Gold Miners Eye Further Upside
  • 7 days Alibaba Exec Sets Record With $3.5 Billion Brooklyn Nets Purchase
  • 7 days Smart Contracts: The Tech Reshaping Entire Industries
  • 8 days Protests Threaten $5 Billion Peruvian Copper Mine
$15,000 For Your Crypto’s Ticket To Visibility

$15,000 For Your Crypto’s Ticket To Visibility

Market manipulation might be the…

$32 Million Crypto Heist Halts Tokyo Exchange

$32 Million Crypto Heist Halts Tokyo Exchange

Tokyo’s Bitpoint Japan Exchange has…

  1. Home
  2. Cryptocurrencies
  3. Other

Bitcoin Hash Rate Stutters After Chinese Floods

BTC

China is the world’s undisputed leader in bitcoin mining and home to the largest mining pools including AntPool, BTCC, F2Pool and BW. Despite feverish efforts by the government to stamp out the trade, China remains largely responsible for keeping the bitcoin industry alive with 70 percent of bitcoins mined there.

But the thriving industry could now be under threat, this time not from the Beijing government but from Mother Nature.

Severe storms have devastated 48 cities in Sichuan and Shandong provinces leaving a trail of destruction in their wake. The country’s Ministry of Water Sources estimates that at least 250,000 people have fallen victim to nature’s fury, one that has wreaked havoc and economic losses amounting to $111 million. Sadly, it appears that the floods have also taken out a bunch of Chinese miners as evidenced by the image below as well as bitcoin’s hash rate nosediving after the floods:

(Click to enlarge)

Source: CryptoSlate

Bitcoin Hash Rate Plunges Then Corrects

According to Golden Finance, China’s cryptocurrency news platform, the Sichuan flooding led to the loss of tens of thousands of mining rigs, most of them damaged beyond repair.

Those reports appear believable going by the rate at which mining activity plunged at the advent of the floods. The Bitcoin hash rate dropped from roughly 43 million TH/s at the time the floods hit to just 30 million 24 hours later, a massive 30-percent decline.

(Click to enlarge)

Source: CryptoSlate

The interesting thing is that the sharp drop soon corrected, suggesting that miners elsewhere picked up the slack. But does that mean that China’s role in the bitcoin ecosystem is overrated? Probably not. After all, China has become the world’s pre-eminent haven for cryptocurrency mining for a reason. Related: What Sparked Gold’s Unexpected Rally?

First off, bitcoin mining costs in China are considerably lower compared to other countries with comparable infrastructure.

U.S.-based electric hardware supplier Elite Fixtures crunched the numbers in February that estimated bitcoin mining costs in different countries. China’s cost of mining a single bitcoin clocked in at $3,172, considerably cheaper compared to costs in other major mining nations including Sweden ($4,746), Georgia ($3,316) and the Unites States ($4,758). In fact, only 16 countries across the globe boast cheaper mining costs.

But more importantly, China has plenty of under-utilized infrastructure in provinces like Sichuan where vast amounts of electricity are generated in coal and hydro-electric power plants. These companies tend to sell their excess capacity to huge miners on the cheap. And that’s an acceptable arrangement for them because the power would otherwise go to waste.

Others have even started their own mining operations to utilize the excess power as well as available water for cooling. Not many countries can lay claim to such abundance.

Other Countries To the Rescue

So what would happen in a hypothetical situation where China’s bitcoin output fell dramatically and irrevocably?

The most likely outcome would be that neighboring jurisdictions like Hong Kong and Mongolia would seize the opportunity to ramp up their own production. Hong Kong has been trying to establish itself as a leading hub for crypto-assets, although high electricity costs would prove challenging for miners.

Meanwhile, Mongolia with its impressive fiber internet connections would be a good alternative, while other major producers such as India Georgia, U.S. and Japan would likely also step up.

One thing is sure though: China’s low production costs help to stabilize the industry, and other players would struggle to fill its shoes.

By Michael Kern for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment