Chinese media platform Global Finance is reporting that tens of thousands of Bitcoin mining rigs have been drowned in floods in Sichuan, China. Apparently, 70% of Bitcoin mining rigs are in China, and 70% of Chinese Bitcoin mining rigs are in Sichuan. This is due to an abundance of cheap hydro-electric power in the region. The Bitcoin mining hash rate actually dropped significantly at the time the floods occurred, from 43.1 exhash/s on 23 June 2018 (the all-time record for Bitcoin mining hash rate) to 30.5 exahash/s on 26 June. Global Finance says the timing of the dip in mining hash rate corresponds exactly with the Sichuan floods.
It can’t be known for sure whether the drop in Bitcoin’s mining hash rate was caused by the floods in Sichuan, but when looking at a long-term mining hash rate chart the drop in hash rate is much greater than normal variations. This is possibly the biggest drop in mining hash rate in Bitcoin’s history. The hash rate did recover to 39.5 exahash/s on 27 June, still 3.6 exahash/s below the all-time high set on 23 June, and this difference could possibly represent machines that were damaged or destroyed in the flood and offline.
According to the Global Finance news report, during the peak of flooding some hydro-electric power plants went offline due to heavy debris in the water. Bitcoin mining in China largely depends on cheap hydro-electric power, so perhaps hydro-electric power plants turning back on can explain the quick recovery of Bitcoin’s mining hash rate on 27 June.
Heavy continuous rains have impacted parts of China this week, probably associated with the monsoon which is a common summer phenomenon. 31 rivers in 6 different provinces have overtopped their banks. Flooding was especially bad in Sichuan and Shandong, with vast amounts of cropland and houses damaged. At this time estimated damage is USD 111 million, but fortunately, no one has died in the floods.
Overall, perhaps the lesson from this story is that Bitcoin mining needs to be spread out geographically to maintain a secure network. If a large amount of Bitcoin mining is concentrated in one spot it can be destroyed all at once by a disaster, which is detrimental to network security.
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