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July 13 (NBD) -- Excessive rains and floods in Southwest China' Sichuan province raised concerns over bitcoin mining activities there as pictures of affected mining machines were circulating on the website. Some even associated the global hashrate dip in recent days with the floods.

Morgan Stanley analysts estimate that the Sichuan floods could affect up to 8-10 percent of global bitcoin mining activity, Financial Times reported, noting given that Chinese miners produce between 50 and 70 percent of the world’s bitcoin, as well as a significant amount of other major cryptocurrencies, the floods expose the sector’s vulnerability. 

Different from the severe damage shown in the pictures on the Internet, Jiang Zhuoer, founder of a bitcoin mining farm in Sichuan BTC.Top, told NBD that few bitcoin miners were affected by the flood, adding that the flood's impact on bitcoin mining farms was limited.

It's been forecasted that heavy rains are to continue next several days in Sichuan. With regard to this, Jiang said to NBD that rainy days in summer are not something new for large and well-established bitcoin mining farms. Jiang said, to his knowledge, big bitcoin mining farms in Sichuan were currently operating normally.

But Jiang also acknowledged the possibility of power failure caused by temporary shut-down of small hydropower station in face of flood, but it would exert very limited impact on the overall hashrate.

It is noted that hashrate dipped from June 24 and down to the lowest point at June 27, which coincided with the flood period. However, one cannot tell the exact computing capacity simply by judging from hashrate changes in a mere one or two days, Jiang explained.   

Leo Weese, president of the Bitcoin Association in Hong Kong, said to Financial Times that while some published charts suggested a 30 percent drop in hashrate as a result of the flooding, "in reality these charts are just guesses based on how many blocks have been found in a day."

When asked about the reason behind the sliding hashrate, Jiang explained that the hashrate was mainly influenced by the market factors like bitcoin price as well as the amount of computing power consumed by mining, for instance, hashrate will fall at the time when revenues of farms cannot cover their power bills.

It is noteworthy that bitcoin price started to plummet this year after its 2017 surge. According to the data platform Coindesk, the bitcoin price drop below 6,000 U.S. dollars in late June, down more than 64.9 percent compare with its January high of 17,100 U.S. dollars. 

 

Emailtanyuhan@nbd.com.cn

Editor: Tan Yuhan