Sichuan Floods Had “Little Impact on Bitcoin Mining Farms” Says Mining Pool Founder

  • A BTC mining pool owner recently claimed the floods in Sichuan barely affected the flagship cryptocurrency's hashrate.
  • Per his words, only 200 to 300 miners were destroyed, as larger operations were prepared.

Heavy downpours that have recently been affecting the Sichuan province in China allegedly barely affected cryptocurrency miners in the region, according to the owner of prominent mining pool BTC.Top Jiang Zhuoer.

During an interview with local news outlet National Business Daily, Zhuoer revealed large mining operations are prepared for such events, and as such weren’t significantly affected. He stated:

In reality, last month’s heavy rain in Sichuan province had little impact on the bitcoin mining farms there, and only a few devices were destroyed by the massive flood.

Jiang Zhuoer

Social media users have been sharing a picture that seems to show dozens – or hundreds – of ASIC cryptocurrency miners seemingly damaged by the flood. With the picture, came rumors that “tens of thousands” of mining rigs had been destroyed, leading to a dip in BTC’s hashrate.

The picture, per Zhouer, shows what happened to a “small-scale mining farm” in the region that was operating in a facility it built, without being authorized to do so. Per the mining pool owner, the operation’s owners weren’t expecting the floods when they built their facilities, and as such were caught off guard.

He said that “only” 200 to 300 mining rigs were destroyed because of the floods, something he claims had “little or no effect on the entire network’s computational power.” Torrential rain, he added, is a “common thing” during the summer.

While he touted large mining operations like his are prepared for these events, smaller operations may suffer. He was quoted as saying:

But days of torrential rainfall might force some small hydropower stations to close due to floods, then leading to the shutdown of mining machines.

Jiang Zhouer

Notably, available data does show the flagship cryptocurrency saw its hashrate drop at the same time analysts claimed the floods destroyed mining equipment. When asked about the drop, Zhouer claimed “the dip in hashrate this time was really no more than standard variance.”

Floods have been getting the crypto community’s attention. As CryptoGlobe covered, leading cryptocurrency exchange Binance has recently revealed it’s set to donate $1 million to flood victims in Japan, in cryptocurrency or in the Japanese Yen. The company’s CEO, Changpeng Zhao, asked for the community’s support.

Chinese Yuan 'Inversely Correlated' with Bitcoin, Amidst US-China Trade Wars

Since January 2018, China and the US have been involved in an intense trade war in which both countries have significantly increased tariffs on imported goods and services.

Due partly to the rising tension between the two countries, the Chinese yuan (CNY) has been losing value against the USD. During the same time period, the price of bitcoin (BTC) and other major cryptoassets has been surging.

As noted by the South China Morning Post (SCMP), the value of BTC, the world’s most dominant cryptocurrency, increased by 26.5% to $7,878 during the time period from May 5 to May 17. Notably, US President Donald Trump had announced on May 5 that he would further increase tariffs on goods imported from mainland China.

Chinese Yuan Weakens as Nation’s Government Responds to Increased Tariffs

The SCMP pointed out that the yuan dropped to its lowest level since the past six months after the Chinese government responded to Trump administration’s decision to impose higher tariffs on China.

Commenting on the price fluctuations of both the yuan and bitcoin, Garrick Hileman, a Macroeconomics Researcher at London School of Economics (LSE) and Head of Research at Blockchain.com, remarked:

We are observing a strong inverse correlation between the [Renminbi] RMB’s value and bitcoin, meaning that recent RMB declines over trade tensions have been closely matched by increases in the value of bitcoin.

“Correlation Does Not Necessarily Equal Causation”

Hileman also mentioned that we “cannot be 100% certain” that the bitcoin price has been increasing due to heightened concerns regarding trade tensions and the corresponding decline in the value of the yuan. The blockchain researcher stated:

Trade tensions and declines in the RMB’s exchange rate as correlation does not necessarily equal causation.

Hileman, who earned his Phd from LSE, revealed:

This is not the first time we’ve seen significant increases in the value of bitcoin taking place alongside yuan concerns.

He added that there’s “growing recognition of bitcoin as ‘digital gold’ and it being used as a hedge against various macroeconomic risks.”

“This Year, the Narrative Is Bitcoin, Bitcoin, Bitcoin”

According to the SCMP, bitcoin’s price may have surged recently due to the generally positive remarks made about it at the Consensus 2019 conference.

Meltem Demirors, the Chief Strategy Officer at CoinShares, a crypto treasury management firm, has also confirmed recently that the narrative this year has been mostly about Bitcoin. Demirors revealed that both institutions and retail investors are “feeling good” and are “more confident” about the long-term potential of Bitcoin and the evolving ecosystem that supports it.