Partner of the largest blockchain-focused fund in China called INBlockchain, Eric Meltzer, reported that there were rumors suggesting that a massive flood destroyed a bitcoin mining facility in China. The entire province of Sichuan, China was affected by the flood.
Meltzer is an early adopter of the cryptocurrency and invested in Bitcoin back in 2013. He is also one of the early investors in Ethereum, Zcash, Qtum, EOS, OmiseGo, Status and Decentraland. And it only took 5 years for INBlockchain to become one of the most influential cryptocurrency firms in the Asian region which also has strong connections in China.
Meltzer shared a photograph of a mining facility that was destroyed by the heavy rain that was followed by a flood. Stacks of ASIC miners were affected as you can see in the photograph below. The floods have also affected most parts of China because of heavy rainfall over the past few days.
According to the Chinese News Service (ECNS), a state-owned news agency in China, heavy rainfall from Wednesday to Thursday affected the Anhui, Jiangsu, Sichuan, Shandong and Jilin provinces. Caolaoji, Anhui and Dafengzha, Jiangsu were the most heavily hit regions.
The hashrate of bitcoin temporarily dropped from 43 million TH/s to 30 million TH/s, more than 30 percent overnight according to the data provided by Blockchain, the second most widely used cryptocurrency wallet. And while volatility is usual in the hashrate chart of bitcoin, the drop was sufficient enough to alert the investors and analysts.
It took less than 24 hours for the hashrate to bounce back to 40 million TH/s after the initial 30 percent drop, and the analysts have attributed the decline of the hashrate to the Sichuan flood.
But according to Meltzer, who discussed the Sichuan mining facility case with the local analysts, said that the theory put forth by the China-based analysts on the bitcoin hashrate drop is a combined effect of the heatwaves in Eastern Europe and the flooding in Sichuan province. This is causing the mining centers that are running with low-profit margins to generate even less money.
Did it Have a Long Term Effect on the Bitcoin Hashrate?
While the majority of bitcoin’s hashrate originates from huge mining pools like BTC.com, AntPool, and ViaBTC, which outsource the computing power from ASIC miners globally, the flooding of one large mining center in Sichuan might have shut it down but it is not sufficient enough to have any real long-term impact on the hashrate of Bitcoin.
The rumors about the flooding situation in Sichuan and the shutting down of large-scale mining centers by strong floods are yet to be confirmed by the local authorities. However, local analysts have emphasized that even if the flood has wiped out a huge mining facility in China, it is not sufficient enough to trigger the hashrate to drop by 30 percent in a very short period of time.
Moreover, if the flooding was the only reason that caused the hashrate to drop, it would mean that a large part of the computing power that power the Bitcoin network is based in a single mining center which is very unlikely.