[2018-07-01] Rumors: Flood in Sichuan China Destroyed Bitcoin Mining Centers

[Psicotico]

Eric Meltzer, a partner at INBlockchain, the largest blockchain-focused fund in China, reported that rumors suggest a bitcoin mining facility in China was destroyed by a massive flood that affected the entire province of Sichuan, China.

Heavy Rain and Flood in Chinese Provinces Affect Mining Centers
As an investor in bitcoin back in 2013 and an early investor in Ethereum, Zcash, Qtum, EOS, OmiseGo, Status, and Decentraland, within five years, INBlockchain has become one of the most influential cryptocurrency investment firms in Asia with strong connections in China.

This week, Meltzer shared a photograph of a destroyed mining facility showing stacks of ASIC miners that were affected by heavy rain and flood that swept most parts of China over the past few days.

The Chinese News Service (ECNS), the second largest state-owned news agency in China, reported:

“From Wednesday to Thursday, heavy rain hit Anhui, Jiangsu, Sichuan, Shandong and Jilin provinces. Caolaoji, Anhui, and Dafengzha, Jiangsu, were the most heavily hit, the State Flood Control and Drought Relief Headquarters said.”

Based on the data provided by Blockchain, the second most widely utilized cryptocurrency wallet platform behind Coinbase, the hashrate of bitcoin temporarily dropped from 43 million TH/s to 30 million TH/s, by more than 30 percent overnight. While volatility in the hashrate chart of bitcoin is expected, the sudden drop in the hashrate of bitcoin was sufficient to alert investors and analysts.

Over the past 24 hours, the hashrate has rebounded to 40 million TH/s after its initial 30 percent drop, and analysts have attributed to the decline in the hashrate of the Bitcoin network to the Sichuan flood incident.

However, Meltzer, who discussed the Sichuan bitcoin mining facility case with local analysts, said that the theory China-based analysts have on the bitcoin hashrate drop is a combined effect of the flood in Sichuan and increasing heatwave in Eastern Europe causing mining centers with low profit margins to generate even less money.

Did it Have an Impact on Bitcoin Hashrate?
The majority of bitcoin’s hashrate originates from mining pools like BTC.com, AntPool, and ViaBTC, which outsource computing power from ASIC miners globally. Hence, while a large mining center in Sichuan may have shut down due to poor weather conditions, it is not sufficient to have any real impact on the hashrate of bitcoin.

As of current, the rumors about the situation in Sichuan and the destruction of large-scale mining centers by strong floods and heavy rain are yet to be confirmed by local authorities. But, local analysts have emphasized that even if the flood wiped out a major mining facility in China, it should not be enough to trigger the hashrate of bitcoin to fall by 30 percent in a short period of time.

More to that, if the flood was the sole cause of the hashrate drop, it would signify that a significant chunk of the computing power that powers the Bitcoin network is based in a single region and a certain mining center. It is highly unlikely that the flooded mining centers in Sichuan caused the drop in the hashrate.

https://www.ccn.com/rumors-flood-in-sichuan-china-destroyed-bitcoin-mining-centers/

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[richardsNY]

The pricture displaying all that hardware on the ground really makes you feel for sorry for those affected. Back in early June we also experienced a significant drop in hashrate -- the peak went from around 43 million TH to around 31 million TH. It seems that it at least affected Bitcoin's block generation time which jumped back to exactly 10.0 minutes, but that's normal with large hashrate fluctuations. Everything looks to be fine overall. This actually shows how important it is to have a widely distributed mining industry. I strongly hope that China with their unstable mentality will keep triggering miners to look for alternatives.

[BitHodler]

This actually shows how important it is to have a widely distributed mining industry. I strongly hope that China with their unstable mentality will keep triggering miners to look for alternatives.

I hope that a side effect of this will be that BTC.com and Antpool (which are controlled by Bitmain) will fall apart. I would prefer a scenario where each miner only controls like 1-5% of the network at most.

Currently the two aforementioned pools top 40% which hopefully should stimulate individual miners to switch to other pools, but it's not that easy since it will cost them income if there are only a few miners switching.

SlushPool is the next best pool to connect to, also for 'political reasons', and they gained a decent bit of growth in the last months. Let's hope that for now will continue. I can't stand Bitmain.

[bbc.reporter]

If that flooding really destroyed a mining farm, then it would be welcome news for other miners who would easily replace the loss in hashrate. But the sad news is that the miners that have the resources to make up for the loss would be Bitmain and might have already done it. However Halong might have also taken the chance.

[kevoh]

From the picture, that looks like a lot of S9 miners. If one should do a count of S9 in that picture it will tally up to about 100 to 120 S9 damaged by the flood. At the rate of $2500 to $3000 per S9 miner that's a lot of money literally washed away by the flood.

[Rahar02]

If that flooding really destroyed a mining farm, then it would be welcome news for other miners who would easily replace the loss in hashrate. But the sad news is that the miners that have the resources to make up for the loss would be Bitmain and might have already done it. However Halong might have also taken the chance.

Sadly for the miners in there, but people hope the difficulty decrease as a bunch of BTC mines destroyed by a massive flood.
If you read the article carefully, it stated that;
Did it Have an Impact on Bitcoin Hashrate?
The majority of bitcoin’s hashrate originates from mining pools like BTC.com, AntPool, and ViaBTC, which outsource computing power from ASIC miners globally. Hence, while a large mining center in Sichuan may have shut down due to poor weather conditions, it is not sufficient to have any real impact on the hashrate of bitcoin.
It is highly unlikely that the flooded mining centers in Sichuan caused the drop in the hashrate..
Bitcoin difficulty has increased by 17.89 % in the last 30 days, if we check on coinwarz and bitcoinwisdom, Current Bitcoin Difficulty is 5,077,499,034,879.
However, after reading another article on bitcoinist stated the difficulty drops because of this disaster, current difficulty according to bitcoin.com; 2018/07/01 - Hash Rate TH/s : 37,103,365

https://bitcoinist.com/china-bitcoin-hashrate-floods-miners/
https://www.coinwarz.com/difficulty-charts/bitcoin-difficulty-chart
https://www.blockchain.com/charts/hash-rate

[buwaytress]

Right on Rahar. I think companies affected also probably have contingency planning. Ie. If machines are destroyed they can be easily replaced (spare parts or even entire rigs that can't already be used due to electricity limitations or simply profitability efficiencies).

Flooding and earthquakes are surprisingly common in Sichuan. I expect insurance to kick in at worst case scenarios.

No hashrate effect unfortunately, guys.

[bbc.reporter]

@buwaytress. Hashrate is easily replaced but it might not be by the same people from Sichuan. I reckon there were large buyers of ASICs during the bull rally of 2017 but some of them might have turned their miners off because they could not make a profit in the present condition of low price, high difficulty.

[1Referee]

Hashrate is easily replaced but it might not be by the same people from Sichuan.

That.

Mining is an extremely competitive industry where larger farms hope that the smaller farms give up just to make sure they will replace them with their own network power. In this case it might not have been a network power drop that was caused intentionally, but for miners there is no difference. The only thing miners care about is to fill up the gaps left by others to obtain a larger share of the network without affecting the difficulty much.

If miner X for whatever reason is not mining anymore, even if it's only a 30 minute outage, miner Y will replace their network share and benefit. If miner X is a smaller miner, then he may choose to wait for another hashrate drop opportunity instead of firing up his machines directly. It's brutal.

[cryptofonia]

Why do this information about flooding is "rumor"? It's got confirmed by foto footage and from various media outlets. The main question how Bitmain operations are being concerned?

[richardsNY]

Currently the two aforementioned pools top 40% which hopefully should stimulate individual miners to switch to other pools, but it's not that easy since it will cost them income if there are only a few miners switching.

It's practically impossible to see people switch by themselves. If the pools individually are nearing the 50% mark, or even 45%, they will either reduce their own share or they will ask miners to switch. In this case not much will change since the second best alternative is still a Bitmain lead operation. In other words, you can choose to mine at Bitmains pool, or Bitmains pool. Miners won't let themselves earn less and go for a low share pool that will definitely result in at least 50% less earnings. Miners don't really care about what happens as long as their earnings remain relatively unharmed. Everyone is in here for the dollars, Bitcoin comes second.