Sichuan Floods Expose Key Risk for Bitcoin Miners

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.

Bitcoin Hashrate

Despite the hashrate dropping due to the floods the hashrate has bounced back and is recovering, as shown in the chart above.

Bitcoin Investors Reportedly Lose Millions in South African Exit Scam

Michael LaVere
  • VaultAge Solutions CEO Willie Breedt is being accused of making off with millions in investor bitcoin.
  • Breedt allegedly fled the country for Mozambique and has not communicated with investors since December 2019. 

South African cryptocurrency investors are accusing the CEO of VaultAge Solutions of stealing millions in crypto before going on the run. 

According to a report by AllAfrica, Willie Breedt, the CEO of cryptocurrency investment firm VaultAge Solutions, is presumed to be on the run after not making public communications since December 2019. The report claims Breedt was speculated to be staying near the town of Jeffrey’s Bay and that his whereabouts where being looked into by the country’s criminal investigation unit. 

However, South Africans who invested cryptocurrency with the now-defunct firm fear the CEO may have fled the country for Mozambique. 

Breedt is accused of stealing millions from bitcoin investors. The report claims VaultAge Solutions is not registered as a legitimate financial institution with the Financial Services Conduct Authority (FSCA), despite having more than 2000 investors. 

The report quoted investor Lettie Engelbrecht from Krugersdrop, 

We are pensioners and invested R200 000. From December until April, we received payments on the growth of our investment. Since then, we never got any money. We are desperate and living on a shoestring budget.

One South African investor reportedly had deposited more than R6 million ($342,000) with Breedt’s company. 

Breedt delivered a written reply to local outlet News24, explaining, 

I am busy attending to the commitments I have made to members. The commitment is to have all the initial capital paid back by 31 May.

Colonel Katlego Mogale of the Directorate for Priority Crime Investigation (DPCI) said authorities are investigating the case but cannot reveal any more information “at this stage.”

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