Bitcoin’s hash rate has witnessed a short term drop as the rainy season is finally coming to a close in China and excess cheap monsoon hydroelectricity supply is running out. The Bitcoin hash rate is the total amount of computing resources dedicated to the Bitcoin network by miners around the world. The more hash rate the network has, the more secure it becomes.
Bitcoin mining is an energy-intensive process and it is only viable for miners if the costs of electricity are dwarfed by the mining exploits that are shared by miners around the world. This is the reason why much of the mining power of the network is installed in areas with access to cheap hydroelectric power like Canada, Russia, Iceland, and China.
China is home to some of the biggest dams in the world, including the Three Gorges Dam that generates more than 10,000 MW of electricity. There are hundreds of small and large dams constructed in the country that provide cheap electricity to industries and recently large bitcoin mining farms.While rains generally disrupt other industries, Bitcoin mining stands to benefit from it most as During the rainy season, this power output can increase up to 50% as excess turbines are made operational to make use of the additional monsoon waters flowing into the dams.
As a result, the Chinese miners were able to use this to their advantage and employ maximum number of mining equipment during this golden period.
According to the data from blockchain.org, the hash rate suffered a sizeable drop from 115,000 TH/s (110 EH/s) to 80,000 TH/s (80EH/s) in the space of a few days between 24 October and 28 October. This ~30% drop was only temporary and eventually the hash rate stabilized around the 90,000-97,000 TH/s mark.
According to Bitcoin mining pool data company Poolin’s co-founder Chris Zhou, the drop in the recent hash rate can be attributed to the end of the rainy season in Chinese Sichuan province. The region is home to some of the biggest mining installments anywhere in the world due to the abundant cheap hydroelectricity available in the region.
With the recent rebound in prices and short-term btc price index in bullish territory, mining power may continue to increase in the near future, especially with the next block reward halving in May 2020.