Recent heavy flooding in China’s Sichuan Province have reportedly caused heavy damage to a local cryptocurrency mining operation. Chinese blockchain and crypto information platform Golden Finance reported that on June 27 and 28, the area was hit with exceptionally heavy rains and the resulting flooding has destroyed “tens of thousands” of mining devices which are unlikely to be salvageable or repairable.
Specifics are unavailable as to how many mining devices were lost to the flood, and which cryptocurrencies were being mined in the area, although it is known that Sichuan Province is significant in the world of bitcoin mining.
Mining is an energy- and computationally-intensive practice that uses dedicated devices to create new blocks in a blockchain, process transactions, and issues new coins within a cryptocurrency network. According to some, bitcoin’s network alone is set to consume 0.5% of the world’s energy by the end of 2018.
A large amount of bitcoin mining occurs in China, possibly as much as 70%. In particular, the Sichuan Province has been dubbed China’s “Bitcoin mining capital” due to its high concentration of mining operations. These operations were attracted to the area because of cheap electricity and the cold climate.
Did this natural disaster have any significant impact on bitcoin or cryptocurrency in general? Not really. While several news outlets, including Golden Finance, have made an association between a drop in bitcoin’s hashrate (total computational power) and the floods, data from Blockchain.com suggests that the hashrate actually increased on the days of the flood (June 27/28). This indicates that the effect of the flood was not significant enough to affect the entire network.