Mining data aggregators across the crypto space has mainly attributed the Chinese province of Sichuan, seeing the end of its wet season as to why there’s such a slump in Bitcoin (BTC)’s hash rate. With the region predominantly relying on hydroelectric power, the wet season provides a large surplus of energy that has now quite literally dried up. As a result, many BTC mining operations are moving over to other jurisdictions.
Massive Drop In Mining Power
The Hashr8 BTC mining blog’s Thomas Heller had reported on the 26th of October, 2020, that an approximate 22 exahashes per second (EH/s) in mining power had left the Bitcoin network. This runs in tandem with the end of the wet season in Sichuan occurring just the day prior, according to weather forecasts.
Foundry, the subsidiary of Digital Currency Group focusing on crypto mining, had Kevin Zhang also estimate an approximate drop of 20 EH/s. Zhang noted that the average seven-day hashrate for BTC was set at 132.9 EH/s. This stands in contrast to the daily hashrate, which has been consistently tagging at 112.9 EH/s
Blockchain.com, in turn, has estimated that the hashrate saw a drop between the 24th and 25th of October, going from 151.1 EH/s to 116.3 EH/s directly thereafter.
Crypto Mining Season For China
The Sichuan province stands as one of the largest hubs for crypto mining the world has to offer. The rainy season within this region causes the hydroelectricity prices to plummet, which subsequently leads to many a crypto mining operation to flock there, since electricity costs are a major factor in crypto mining profitability.
The University of Cambridge’s Bitcoin Electricity Consumption Index (BECI)’s most recent data estimates that the province had represented a staggering 18.5% of the global hash rate for BTC back in April of 2020. This stands as double its share recorded in the prior rainy season.
Flocking To Where It’s Cheapest
Hashr8’s Heller has predicted that many of these miners moving from Sichuan will base their operations overseas, or otherwise within the Inner Mongolia and Xinjian provinces. These two provinces represented 7.7% and 30.1% of the global hash power in April, respectively.
Back in 2018, it was estimated that a staggering 80% of all Chinese crypto miners move their operations to Sichuan during the rainy season, having moved from other parts of the country to do so. Back in December of 2019, CoinShares had published data estimating that Sichuan represented 54% of global mining activity.