Will China's Massive Power Outage Cause Bitcoin's Price to Drop to $50,000?

Woo noted that the report confirming the blackout was released late last week, and that the latest blackout occurred at a local coal mine in response to a safety inspection. The incident left 21 miners temporarily trapped underground after a power outage and communications were disrupted.

According to the Cambridge Bitcoin Energy Consumption Index (BECI), Xinjiang accounts for nearly a quarter of the global hash rate.

Analysts noted that yesterday’s biggest daily drop in the Bitcoin network’s hash rate was the largest since November 2017, with the hash rate falling from 172 million terahashes per second, or TH/s, to less than about 154 million TH/s, according to Ycharts.

Popular cryptocurrency market analyst Willy Woo attributed the violent April 18 cryptocurrency crash to a sudden drop in hash rate caused by a power outage in China’s Xinjiang region.

Woo noted that 9,000 BTC was transferred to Binance on April 16, speculating that the funds may have been sent by a “whale with knowledge of China.”

Combined with a massive sell-off in the quarterly futures markets, the downward momentum drove $4.9 billion worth of Bitcoin liquidations and $4.4 billion in margin calls across altcoin markets — with a record 1 million accounts being liquidated.

However, not everyone agrees with Woo’s analysis, with Cinneanhaim Ventures partner Adam Cochran describing the idea that a power outage in Chinese mining areas caused $BTC to drop last night as “nonsense.”

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You may have seen some charts claiming there is some correlation between the mining hash rate and Bitcoin’s price drop.

I've seen all sorts of words appear in this chart, including "causation" and "correlation" by a lot of people who don't do math. pic.twitter.com/Gfog3Sk8Wo

— Adam Cochran (@adamscochran) April 18, 2021

Woo noted that long-term whales, who rarely sell during dips, are buying heavily, adding that the lower $50,000 range is forming the “largest price discovery cluster since BTC was below $10K.”

“The validation of BTC as a trillion-dollar asset is very strong,” he said, adding that 13.5% of the entire BTC supply has moved on-chain and Bitcoin’s capitalization has surpassed $1 trillion.