The domestic flood disaster situation is severe, will it have a serious impact on Bitcoin mining?

According to reports, the recent flood disaster in China has caused billions of dollars in losses. This once-in-a-century natural disaster has put heavy pressure on the world's largest hydroelectric power station. my country has a large share of the world's Bitcoin (BTC) hash rate, or computing power, and we have good reason to worry about the loss of domestic mining facilities.

According to Kenneth Rapoza, a senior writer for Forbes, the country is facing "the worst flooding since 1998" due to the monsoon season and heavy rains, accompanied by landslides. Many dams are under tremendous pressure, and what's more, these dams are located at a higher altitude than the world's largest hydroelectric power station, the Three Gorges Dam, which means that the Three Gorges Dam will also be under greater water pressure.

Daniel Frumkin, a researcher and technology creator at Braiins, the developer of the bitcoin mining pool Slush Pool and the Stratum V2 protocol, told Cryptonews.com, "If the Three Gorges Dam really bursts, the consequences will be disastrous, but it is extremely unlikely to happen." He believes that most of the core party members in the country have degrees in water conservancy engineering, and "this subject can be traced back hundreds of years," which fully demonstrates that the country attaches great importance to this issue and they will not allow such a thing to happen.

In addition, the country is actively carrying out preventive measures. On the one hand, it seems that more and more water is being released from the sluice gates, causing flooding disasters downstream, and on the other hand, we must do our best to prevent disasters once the dams burst. However, according to researchers, government authorities are blasting other dams in an effort to release floodwaters. Raposa also cited news reports that entire dams were "destroyed" to release the massive influx of floodwaters.

"For China, if the world's largest dam collapsed, the disaster would be devastating and the entire country would lose face. So they will do everything they can to ensure that this does not happen. From the current perspective, the most likely scenario is that the flooding will continue until next month or longer, but the dam will eventually hold," said Frumkin.

In addition, if the heavy rains this week really end, the water level pressure on the dam is expected to ease.

Miners don’t seem to be affected (yet)

While Bitcoin mining in the country has been somewhat affected by what are said to be the worst floods in decades, Johnson Xu, chief analyst at TokenInsight, told Cryptonews.com that in his opinion, major Bitcoin miners have not been affected too much.

“Miners already have a comprehensive understanding of the hazards of the rainy season, including potential floods, mudslides, etc.,” Xu said. “Although they have limited methods to hedge these risks (such as insurance), they can make full use of local networks, which can help mitigate the risks posed by floods and thus reduce the impact on Bitcoin mining operations.”

Frumkin said that flooding and the potential collapse of the Three Gorges Dam have been topics of discussion among miners over the past few months. Nic Carter, a partner at Castle Island Ventures and co-founder of cryptocurrency market analysis company Coin Metrics, stressed that given the huge threats facing the entire industry, we need to have a deeper and broader discussion.

Frumkin added that exact information about what actually happened and how many miners were affected across the country is still unknown.

“All we can do is keep an eye on the block mining time and speculate that at the current Bitcoin price, as long as the hash rate remains above c. 110 EH/s, Bitcoin mining will not be affected too much,” he said.

Xu added that some bitcoin mines are "located in very 'secret' places in the country" and are difficult to find without any "introduction".

Speaking of hash rate, Frumkin also noted that this series of events and discussions has had “little impact” on the mining industry as a whole. We can see that as early as early June, there were flood disasters and the risk of the Three Gorges Dam breaching, but throughout June and most of July, the hash rate of the entire network was rising, and it has only fallen in the past week.

Bitcoin hash rate chart

7-day moving average. Image source: BitInfoCharts

"An important point is that most of the domestic mines are located in the western part of Chengdu, Sichuan, upstream of the Three Gorges Dam. There are many other hydropower stations in Sichuan that can provide electricity to local miners. Perhaps the flood disasters there are not particularly serious, or our miners have a certain foresight and deliberately built mines on high ground." said Frumkin.

Earlier this month, HASHR8 analyzed the impact of flooding on the mining industry, as it is estimated that about 65% of Bitcoin hash rate is generated in China. They believe that conditions are "not as profitable as previous difficult periods" for Bitcoin miners, but hash rate and mining difficulty have been rising.

"One reason for the increase in hash rate could be that Chinese miners have acquired the latest generation of mining equipment," HASHR8 said. "The first online launch of these powerful mining machines is likely enough to offset the negative impact of the harsh natural conditions and destroyed facilities."

HASHR8 predicts that even greater disasters will occur in the coming months, and Xu also predicts that there will be certain negative impacts. The senior analyst pointed out:

“According to my inference, some miners will indeed be negatively affected by floods, but experienced miners are unlikely to be affected, or even not affected at all. Bitcoin mining is gradually forming a competitive landscape of survival of the fittest.”

As of the time of writing (16:29 GMT), Bitcoin is trading at $9,357, unchanged throughout the day. The price is up 1% on the week, reducing monthly losses to 2%.

Article source: cryptonews

Translation: Celia from Xiaolian Finance