Bitcoin Hashrate Hits Six-Month Low
- The Bitcoin hashrate has hit a six-month low following the halting of operations by Chinese miners
- The shutting down of a huge coal mining facility in the mining-heavy Xinjiang region has caused the drop
The Bitcoin hashrate has continued to dive following an incident at a Chinese coal mine last week. The Bitcoin hashrate now stands at around 100 exahashes per second (ehash/s), levels not seen since a similarly large drop in November 2020. This represents a near 40% drop from its all time high five days ago, and has resulted in what economists call a ‘natural experiment’ as we wait to see what will happen to the Bitcoin mining situation as authorities try to fix the problem.
Xinjiang Power Plant Shutdown Causes Energy Blackout
The issue at the heart of the Bitcoin hashrate drop rests with a coal mining facility in Xinjiang, north west China. According to several Chinese sources on Twitter, a water leak at the plant resulted in the facility being closed down and a resultant power outage across the region. This includes the huge mining facilities, which currently accounts for some 80% of the country’s mining operations.
The reason why Bitcoin mining is so heavily concentrated in that area at the moment is twofold — firstly Inner Mongolia banned Bitcoin mining recently, forcing many miners to migrate, and with it being China’s dry season, Xinjiang is an ideal place to mine, given its cheap and normally plentiful electricity.
While the leak seems to have been contained, safety checks are still being carried out in the plant which has resulted in continuing blackouts, hence the continually low hashrate:
This has left China’s hashrate at around 32–40%, according to one observer, its lowest for many years. This is reflected in the hashrate distribution, which clearly shows a shift in Bitcoin hashrate dominance in recent days:
Bitcoin Hashrate War Hots Up
The ‘natural experiment’ spoken of by some on crypto Twitter is in relation to how the geographical dominance will resolve itself. With miners in other parts of the world starting to pick up the slack, it will be interesting to see how the situation unfolds when the more powerful Chinese mining centers finally come back online. It is likely that they will reassert their dominance to some extent, but there is a good chance that they will have lost a certain percentage of their Bitcoin hashrate in the process.
Originally published at https://fullycrypto.com on April 20, 2021.