Subsequent to the effect of Bitcoin Halving, the hash rate of the cryptocurrency, depicting the processing power behind Bitcoin blockchain protocol, has surged significantly to levels not been reached before.
However, there has been a drastic fall in Bitcoin hash rate in the last few days, and today, a record low for the year 2020 was recorded. Many people have however claimed that the fall in hash rate is a result of the fact that miners are pulling out of Bitcoin mining activities due to low profitability as they prefer to buy Bitcoin now than run a math-crunching machinery that consumes huge amount of electricity.
Nevertheless, the CEO of Coinnut exchange and the director at Litecoin foundation, Xinxi Wang, has expressed a slightly different opinion, he thinks there are more to the swing in Bitcoin’s hash rate than shared by experts.
He explained that the last time Bitcoin hash rate saw tremendous spike to the ceiling hitting new highs around 122 TH/s, the increase was as a result of the seasonality of China’s hydropower. Hence, one may want to believe that the massive drop is probably due to the same effect.
No doubt, China has great effect on Bitcoin’s hash rate due to the percentage of Bitcoin mining activities that is dedicated to the country. According to the University of Cambridge in a recent research, the Asian country account for about 65% of the world’s Bitcoin hash power, more than half of the hash power in the country is also dedicated to one region.
Usually, when there is heavy downpour of rain and flood, China shuts down some of its hydropower plants to ease pressure on the rivers.
In 2017, China shut down the world’s largest power station, Three Gorges dam, and another, due to flood.
At the moment some of the districts in China are also being affected by flood. According to Asian News International, 5 districts Lakhimpur, Dhemaji, Dibrugarh, Darrang and Goalpara have been battered by flood. Hence the flood could be a possible reason for the drastic drop in the Bitcoin hash rate in the last few days.
Although, China’s major source of power is coal, the hydroelectric powered serves as the second largest electricity source in the country, thus also very important.