Extreme weather conditions are being blamed for a dip in the global hashrate. Published charts suggested a 30 percent drop in the hashrate and this is being attributed to the recent flooding in China.
According to reports in The FT, the downpour at the end of last month exposed a key risk for the sector. The flooding in Sichuan province left hundreds of thousands of people homeless and destroyed many mining farms. The region is a hub for crypto miners due to its low power costs and a cheap hardware market.
China accounts for nearly 70 percent of the world’s Bitcoin mining activities, with Sichuan being declared ‘Bitcoin mining capital’, Bitcoin’s biggest mining pool, Antpool, is based in China.
Other observers are split on the explanation for the fall in hashrate, attributing the dip to a combination of the flooding, a heatwave in Europe and the lower price of bitcoin. Morgan Stanley analysts estimate that the Sichuan floods could only impact up to 8-10 percent of global bitcoin mining activity.
The debate over the reason for the hashrate decline is likely to rumble on for some time. However, what is certain is that the Chinese dominate the crypto mining industry and the concentration of activity in a region susceptible to frequent flooding, the province was also heavily affected by flooding 2013, there exists a significant ‘key man risk’ for the wider industry.
Despite the hashrate dropping due to the floods the hashrate has bounced back and is recovering, as shown in the chart above.