Severe floods, internal fighting among miners, Bitcoin mining industry in a slump

According to the latest weather forecast, the southwest region, especially Sichuan, will have heavy rainfall from the 21st to the 23rd, and there will be rainstorms in some areas. The continuous rainfall has made the water volume in the southwest region too abundant during the flood season. Zhaotong, Yunnan, Aba, Sichuan, Meishan and other places have been hit by heavy rains, which have even caused floods and landslides in mountainous areas.

Not only the general public but also Bitcoin enthusiasts, especially miners, are concerned about the flood situation. After all, in 2018, Sichuan Province was hit by floods that submerged mining farms and soaked mining machines. Will such a scene happen again?

"There is no direct impact," said Octopus, a partner of Weminer, a Bitcoin computing power sharing platform that owns a mine in Meishan, Sichuan. They thought about the water situation when choosing the site, and the mine avoided the low-lying river channels, so the heavy rainfall did not affect the operation and maintenance of the mine.

Bo He, the founder of the Qimiao Mine in Zhaotong, Yunnan, also said that they were not affected by the heavy rain and floods, and that choosing a good location was also their "amulet".

Careful site selection can avoid the risks of physical operation and maintenance of mining farms, but some unnatural factors have become a new burden for the Bitcoin mining industry this year - the economic environment affected by the epidemic and internal disputes among mining machine manufacturers. The former slows down the entry of new miners and funds, while the latter directly affects the shipment volume and quality of mining machines.

Bitcoin miners had been looking forward to the halving and then the flood season. Now, the halving has not happened, but the flood season has arrived. As a result, new unfavorable factors have emerged, which have brought the entire mining industry upstream and downstream into a low ebb.

Despite severe floods, mining accidents have decreased

"This year has been tough, with floods, power outages, and a drop in the computing power of the entire network," Shenyu, the founder of F2Pool, complained on Weibo not long ago. Considering the recent continuous rainstorms and floods in the southwest, Bitcoin enthusiasts can't help but worry about the mining farms in the flood season.

Since Bitcoin mining requires a lot of electricity and water resources, the banks of rivers near hydropower stations have become a more economical location for Bitcoin mines. When heavy rainfall causes floods, these mines built by the water are easily targeted by floods.

In June 2018, parts of Sichuan were hit by continuous heavy rains, causing floods. Since Aba and other areas in Sichuan are the concentration of cryptocurrency mines, some mines were flooded at the time, and the mining machines were soaked in the flood. Pictures of mine operation and maintenance personnel cleaning the mining machines and drying them were once circulated in the cryptocurrency circle. On June 24 of that year, the computing power of the entire network declined significantly, and the computing power of the entire network directly dropped by 30% in a short period of time. The industry once speculated that this was related to the flood outbreak.

This year, the flood situation in Sichuan is more severe than in the past. On July 21, China Youth Daily reported that since the beginning of the flood season, the precipitation in Sichuan Province has been 352.4 mm, close to the annual average. There have been three regional heavy rainfall processes in the province, and 38 rivers have exceeded the warning and protection water levels. The Xiaojin River and the Suomo River, tributaries of the Dadu River, have experienced the largest flood in history, with a recurrence period of about once every 50 years. Severe flood disasters have occurred in Liangshan, Ganzi, Aba, Luzhou, Dazhou and other places.

Zhaotong, Yunnan, also suffered heavy rains. According to media reports, floods flooded houses and submerged farmland. Sichuan and Yunnan are both concentrated areas of Bitcoin mining farms. However, a search by Fengchao Finance found that there was no news of "mining farms flooded" this year.

A person who recently visited a mine in Sichuan confirmed to Fengchao Finance that "there is no news of any mine disaster so far."

The Qimiao Mine in Zhaotong, Yunnan reported that it was not affected by the flood and could be connected to the hosting at any time.

Weminer, which owns a mine in Meishan, Sichuan, also told Fengchao Finance that "there has been no direct impact and the mine is operating normally."

▲ The computing power fluctuates steadily during the flood season

Judging from the computing power data, the recent computing power is also within the normal fluctuation range. OKlink blockchain browser data shows that in mid-to-late June when heavy rains were concentrated, the overall computing power of the entire network showed an upward trend and stabilized at around 120EH/S.

Mine site selection is key to disaster prevention

The mine withstood the floods this year. The reason for this was mainly based on the mining team’s experience in site selection after going through “wind and rain”.

Bo He, the founder of Qimiao Mine, told Fengchao Finance that Qimiao Mine was not directly affected by the flood because it was cautious in selecting the site.

She mentioned that the occurrence of natural disasters such as rainstorms and earthquakes is difficult to predict, but mistakes can be made in site selection. Generally speaking, building a mine directly next to a hydropower station is risky, "the low-lying open space next to the river is even more of a minefield," she said, pointing out that the risk of floods and geological disasters will be lower if the mine is built next to a substation, "if there is a problem with the substation, it must be a major natural disaster."

Octopus also made careful assessments when selecting the site for its mine. In the end, Weminer chose a place with sparse population, high terrain and close to a power station. "When building a mine, electricity, water resources, climate and geological conditions are the most important. We must consider the impact of the mine on the surrounding environment as well as the impact of the environment on the mine, including whether it can be ventilated and avoid floods and earthquake zones."

Although Weminer was not directly affected by the Sichuan flood disaster this time, their mine operation and maintenance personnel did not dare to take it lightly. In early summer this year, they inspected the front and back of the computer room. Octopus asked them to pay attention to the geological changes nearby. Recently, listening to the flood situation reports from the local meteorological and flood prevention departments has become one of their important tasks.

In addition, the maintenance staff of the Weminer mine prepare their own waterproof and drainage facilities on a daily basis, "such as canvas, woven bags, sand, wood, and water pumps, which must be prepared at all times." Since the beginning of summer, the team has often provided disaster prevention training to the operation and maintenance personnel, but he also emphasized, "Although the mine is priceless, if you encounter a particularly urgent situation, you must remain calm, decisively give up your property, and ensure your personal safety first. Life is more important than anything else."

Suffering in the industry downturn

At present, due to experience and proper response, the direct impact of natural disasters on mining farms is relatively small. However, Bitcoin miners do not feel that they can make more money than in the past because of the arrival of the flood season.

Bohe, who just founded the Qimiao Mine this year, has not directly felt the "hardship" of Shenyu as a newcomer in the mining circle, but she clearly feels that "the entire upstream and downstream mining industry has not been easy this year."

The flood season is here, and the machines that were on the verge of shutting down due to the halving of Bitcoin production are now able to start up and join the network, pushing the total network computing power to 120E. The output of a single machine has decreased due to the halving of network rewards and the increase in computing power. At the same time, the price of Bitcoin has also been sideways recently.

▲ After the production was halved, the price of Bitcoin hovered around $9,500

In the first half of this year, the global economy was affected by the epidemic. Against this backdrop, the attitudes of new funds and prospective miners who wanted to invest in the mining industry have changed from the enthusiasm at the end of last year to a continued wait-and-see attitude. "It is more difficult to attract investment in mining sites now than before."

The direct impact of the epidemic on the Bitcoin mining industry is the decline in the production capacity of mining machine manufacturers. In February this year, mining machine manufacturers such as Bitmain, Canaan Creative, and MicroBT all announced that they would postpone the production, delivery, and after-sales of mining machines. After the flood season arrived, these manufacturers gradually started production.

After finally getting ready to start production, Bitmain, which owns a large market share in the Bitcoin mining machine market, has been hit by internal strife. During this period, some mining farms reported that the mining machines they received were not operating normally.

As a "gold-digging" tool for miners, when there are problems with the output and quality of the mining machine, it will invisibly bring the miners the trouble of "cooking without rice".

The mine owners concluded that they had avoided natural disasters with technical measures to prevent disasters and earthquakes, but they had not avoided the downturn in the upstream and downstream industries, and the miners are still having a hard time this year.