China electric issue causes Bitcoin to pull back

[Oasisman]

Several sources has reported about China's electric issues, specifically in the province of Sichuan. The country has been experiencing prolonged dry season causing the lack of hydroelectricity, thus crippling the miners activity in that area.
“Some mines have got power cut for over three days, and some are only allowed to mine during the night,” explains a mining farm owner who operates in Sichuan.
 Source : https://news.bitcoin.com/bitcoin-hashrate-slides-33-since-halving-difficulty-drops-issues-in-sichuan-china/

It was also reported that Sichuan has been contributing not more than 10% of China's Bitcoin hash power.
 Source : https://www.google.com/amp/s/www.financemagnates.com/cryptocurrency/news/local-chinese-authority-seeks-to-curb-bitcoin-mining/amp/

Obviously, Sichuan eletrical issues has been one of the reason why the hash rate drops 33% EH/s, together with some miners who temporarily suspend their activities due to the halving difficulty adjustments.
So, it has been over 3 days now since the electric interruption occured in Sichuan, fits perfectly with how Bitcoin price moved from the past 3 days.
https://m.imgur.com/a/5WEtZ7V

Now, my question is, does the Sichuan electric issue causes Bitcoin to pull back from almost hitting the $10,000 level?
I'd be happy to read all your comments about this.

Edit (As I found a more interesting topic to be discussed) :

What's the correlation between mining hash rate and Bitcoin price?

[1713567331]

1713567331

[1713567331]

1713567331

[ranochigo]

The mining hashrate is not fully indicative of the price movement of Bitcoin. There appears to be some FUD about Bitcoin when the hashrate decreased after halving, presumably also because of the movement of a bunch of coins which were untouched over the years.

In the long term, I highly doubt that the hashrate would influence price significantly, especially given the fact that a temporary interruption wouldn't affect security at any level. The electrical interruption might be a factor in the decrease of hashrate but IMO, the halving was responsible for the bulk of the decrease in hashrate.

[NeuroticFish]

Several sources has reported about China's electric issues, specifically in the province of Sichuan. The country has been experiencing prolonged dry season causing the lack of hydroelectricity, thus crippling the miners activity in that area.

Interesting news. I knew that quite some miners have stopped. I thought that they play on the safe side and will wait for the price to grow before mining again, but dry season / lack of hydroelectricity could also be a strong reason.

[Lunatic_Pandora]

I'm not too worried about this causing a price pull-back but I am hoping for a bit of bear, since I managed to get a nice sum of cash that I got holed up in Binance waiting for BTC to drop to 6-7k again :^)

[o_e_l_e_o]

Now, my question is, does the Sichuan electric issue causes Bitcoin to pull back from almost hitting the $10,000 level?

I agree with the posters above that the hashrate isn't causing a pull back for a couple of reasons.

First of all, the hashrate has never been higher. The recent drop due to the halving plus the events you have described have only taken us back to the same levels we were at at the end of last year, and remains higher than everything from September last year back to the genesis block. When we were pushing $14k back in June, the hashrate was only around 63% of what it is now. When we peaked at $20k in 2017, the hashrate was approximately 15% of what it is now. There is no real correlation between hashrate and price.

Secondly, I don't think what you've described is really that significant. If the links you provide are accurate, than Sichuan contributes 10% of China's hash power, and some but not all of the miners there have stopped or reduced their mining time by 50%. So we are talking about a drop of a few percent in China's hash power, which is an even smaller percentage when considered globally.

Lastly, I wonder if the decreased hashrate may be preventing people from selling their bitcoin. The mempool currently has 70 MB of low fee transactions waiting to be confirmed. A proportion of these transactions will be people who are trying to send their coins to an exchange to sell them, and haven't yet been able to. As the mempool has started to work down in to these low fee transactions over the last few days, so too has the price decreased by a few hundred dollars. I know correlation doesn't equal causation, but I found it interesting nonetheless.

[Oasisman]

The mining hashrate is not fully indicative of the price movement of Bitcoin.

That's another interesting thing to discuss.
I was really thinking about the correlation between these two. So, I was assuming with just a mere observation in the crypto market that it can affect the price movements of Bitcoin.
This was also being discussed in several social medias.

Secondly, I wonder if the decreased hashrate may be preventing people from selling their bitcoin. The mempool currently has 70 MB of low fee transactions waiting to be confirmed. A proportion of these transactions will be people who are trying to send their coins to an exchange to sell them, and haven't yet been able to. As the mempool has started to work down in to these low fee transactions over the last few days, so too has the price decreased by a few hundred dollars. I know correlation doesn't equal causation, but I found it interesting nonetheless.

I was also thinking about this. That's why I have concluded that the hashrate is somehow responsible for the pull back, because of the lack of Bitcoin movements, due to high transaction fees.

[eaLiTy]

Now, my question is, does the Sichuan electric issue causes Bitcoin to pull back from almost hitting the $10,000 level?

The electric issue in Sichuan has nothing to do with the price of BTCitcoin. There is a correlation between miners switching on when the price of BTCitcoin rises and switching off when the price goes down but they do not control the price of BTCitcoin and i am not sure why people always have these kind of confusions.

I was not aware of the electric issues in Sichuan but there was a considerable hash rate drop after halving.

[NotATether]

That's another interesting thing to discuss.
I was really thinking about the correlation between these two. So, I was assuming with just a mere observation in the crypto market that it can affect the price movements of Bitcoin.
This was also being discussed in several social medias.

There's no apparatus that connects the mining difficulty to the price bitcoin will trade at because mining difficulty is something that's controlled at the protocol level while price movements are controlled solely by buying and selling orders, or the lack thereof, as with other market securities.

Maybe you were thinking about the coins miners hold from newly mined blocks. Once coins are mined and placed in somebody's wallet they don't have any relation with the mining process anymore, and may then be moved to places like exchanges where their presence can influence the price in relation to some other currency that's also being held there, same reason why the action of halving doesn't change the price by itself.

I don't think that bitcoins sitting in a standalone wallet can influence the price because there is no supply of dollars held in the wallet that can be moved around.

[dentolas]

I think that BTC is not passing the 10k level because it isn't being able to grab enough external investment... the price behaviour is too similar to a bait on a hook, waiting for the big fish to bite and then pump the price... I guess that the world economics is not helping either
As for the hash rate, it has never been higher (statement considering values before the halving), and it has been growing for a long time... as for the price we can't say the same... the hashrate is undoubtedly important as the network health and strenght resides on it, but I don't think it can easily affect the price unless we see a large increase or decrease that might lead to FUD or FOMO

[Jating]

It's already monsoon season in Asia as far as I know, so I guess this kind of issues will be resolved specially entering around June-October wherein a lot of rains and typhoon usually drops in that part of China. So I'm not sure if the electricity issues has been the cause of hashrate dropping or just miners simply pulling the plug because its no longer profitable because of the difficulty. I guess this is just a short term effect though, we might see it normalize starting June as far as electricity is concern.

[Lucius]

Now, my question is, does the Sichuan electric issue causes Bitcoin to pull back from almost hitting the $10,000 level?

I wouldn’t agree that’s why the price hasn’t reached $10k in the past few days, because if we look at the price movement during this year, we can see that we already had $ 10k + in the first half of February ($10 500 Feb 13), which did not last long. I am of the personal opinion that purchasing power has dropped significantly globally, and that investors are extremely cautious about the possible new big drop in all markets. Some experts have been saying this since the pandemic was declared, referring to the past when several major but strong market corrections followed after the great drop.

Markets are still far from full potential, investors still choose less risky investments and BTC should not be expected to be an exception. The global climate is completely disrupted, and the delay in the rainy season in China is just one of the indicators - a warning has been issued for Europe that this summer will be perhaps the warmest in the history.

[kryptqnick]

Now, my question is, does the Sichuan electric issue causes Bitcoin to pull back from almost hitting the $10,000 level?
I'd be happy to read all your comments about this.

Edit (As I found a more interesting topic to be discussed) :

What's the correlation between mining hash rate and Bitcoin price?

I don't think the price and mining hash rate are connected directly. Only, like ranochigo pointed out, through news and people reacting to the news. And in this particular case, I don't think there's been much disturbing information about mining that could trigger panic selling and the decrease of the price. Bitcoin is only 3% down over the last 7 days which doesn't even look like something worth discussing. And speaking of hash rate, the drop probably shouldn't be attributed fully to these electricity issues in China, as it was predictable that some miners would leave after halving.

[DoublerHunter]

^ Mining hash rate may not have a direct effect right now but if the electric issue in Sichuan will not be resolve as soon as possible then we will all experience the impact of this in bitcoins' price. Halving is still the main reason for this hash rate for there are miners who temporarily suspend their mining and that is base on what had happened on the previous halving and the electric issue in Sichuan still has no concrete evidence yet to prove that it is the main reason for a lower hash rate. Since the Sichuan issue has no direct effect on the hash rate than for me it is not the reason as well for the pullback in bitcoins' price.

[BrewMaster]

hash rate drops 33% EH/s,

no matter how i calculate it, i can not get 33%. the "peak" of the hashrate in the past month (according to the same site with the article) was 120 and it is currently 92. even though both numbers are unreliable it still gives us 23% drop!
https://charts.bitcoin.com/btc/chart/hash-rate#5moc

by the way 92 EHS is the same hashrate we had 2 months ago!!!

Now, my question is, does the Sichuan electric issue causes Bitcoin to pull back from almost hitting the $10,000 level?

not at all. we didn't have any kind of big drops to be concerning or in coordination with any change in hashrate. we had a small drop which was partly because $10k is a psychological barrier and wasn't broken and partly because of the Satoshi related FUD.

What's the correlation between mining hash rate and Bitcoin price?

when price goes up, miners see the increased profit so they increase their hashrate. when price goes down they see the decreased profit and if they don't see any recovery anytime soon (since bitcoin is pretty volatile) they decrease their hashrate (eg. shut down their miners).

[stompix]

It was also reported that Sichuan has been contributing not more than 10% of China's Bitcoin hash power.
 Source : https://www.google.com/amp/s/www.financemagnates.com/cryptocurrency/news/local-chinese-authority-seeks-to-curb-bitcoin-mining/amp/

I can find you 300 articles each quoting Sichuan with anything from 10% to 107%.

Here is 54%:
https://thenextweb.com/hardfork/2019/12/11/bitcoin-cryptocurrency-mining-hash-rate-china-renewable-energy-blockchain/

Here is 70%:
https://news.bitcoin.com/chinese-miners-flock-to-sichuan-for-cheap-electricity-during-the-wet-season/

Everybody is just throwing figures around with no real basis.

Obviously, Sichuan eletrical issues has been one of the reason why the hash rate drops 33% EH/s, together with some miners who temporarily suspend their activities due to the halving difficulty adjustments.So, it has been over 3 days now since the electric interruption occured in Sichuan, fits perfectly with how Bitcoin price moved from the past 3 days.

No, it's not obvious and it doesn't match anything.
The only thing that matches with the reduction in hash rate is the block reward and I'm getting tired of repeating it:

The first block of this epoch:
628992  Mined on  2020-05-05 04:00
https://blockchair.com/bitcoin/block/628992

The halving block:
630000  Mined on  2020-05-11 19:23
https://blockchair.com/bitcoin/block/630000

The last block mined:
630576 Mined on  2020-05-16 09:11
https://blockchair.com/bitcoin/block/630576

So, before the halving we were doing for 6 days:
1008 blocks  in 6 days, 15 hours, 23 minutes  9383 minutes  9.3 mins/b

After:
576 blocks 4 days, 13 hours, 48 minutes 6588  11.43mins/b

Just before the halving the difficulty estimator was:

... between +4.3774% and +6.0926%

now is

between -1.8704% and -1.7868%

What's the correlation between mining hash rate and Bitcoin price?

Price dictates hashrate, simple as that.

First of all, the hashrate has never been higher. The recent drop due to the halving plus the events you have described have only taken us back to the same levels we were at at the end of last year, and remains higher than everything from September last year back to the genesis block. When we were pushing $14k back in June, the hashrate was only around 63% of what it is now. When we peaked at $20k in 2017, the hashrate was approximately 15% of what it is now. There is no real correlation between hashrate and price.

Unfortunately, you're missing something, just as the world was missing something, ... mining gear
An s9 went for 3000$ (twice more than at launch!!! and we were already 2 years later and we're talking about used gear)
Simply there was no way for the hash rate to grow, there were no machines left, there was nobody capable of producing them, nobody could produce 20 times more miners that had been produced in history in a matter of less than a year. That's why the hash rate couldn't keep up.

[hatshepsut93]

Do you think that Bitcoin holders and traders closely watch Bitcoin's hashpower and base their trades on it? This was never the case in the past, we've seen hashpower going up or down by a lot without the same change in price.

People in crypto have a strong tendency to grasp at straws while trying to explain the price movements, which is even more stupid when it's applied to such insignificant movements like this one. Bitcoin losing/gaining 3-5% is business as usual.

[franky1]

first of all the mining farms purchase large allotments of electric in long term contracts. mining farms are not affected by the daily whims of price and domestic electricity stuff.

its the small hobby miners that actually react with emotion and pool hop/coin hop to whatever coin is most profitable to mine at any time.

in short the ratio of hobby:farm is now more in farms favour because less hobbiests are mining

mining is still above the 80exa long term min.

the 'peak' hashrate should never be seen as the norm day to day expectation
the 'peak' price should never be seen as the norm day to day expectation.

so stop thinking the hashrate should be 120k all the time
so stop thinking the price should be 10k all the time

even 8 years ago there was a term which has and should remain in peoples minds
'volatile'
expect swings in price. expect swings in hashrate

[salamat700]

I think that with less mining activities or participants, there can be fewer Bitcoin mined and therefore less Bitcoin that can be sold on the market. This should have a good reason for Bitcoin price to stay higher and not go lower. Anyway, this is just my noob point of view plus we know that the Bitcoin marketplace is not really acting things based on rational thinking (a feature shared by any other market for that matter). On the other hand, this dip can be a good opportunity to buy more Bitcoin as days from now price will be nearing the $10,000 level again, resulting into fast and sure profits.

[The Cryptovator]

To be honest I can't found any correlation between mining hash rate and Bitcoin price (I would be wrong as well). I strongly believe most of bitcoin investors do not care about hash rate. The question about price pull back then I will say it's just normal behaviour of bitcoin trend. Also there was no notable downtrend as well if you see current volatility. The simple reason is of current pull back, btc going to correction zone after Halving. Mostly article about hash rate likely to create FUD in my opinion and whales could accumulate again.

[pooya87]

the only time that hashrate can influence bitcoin price in a meaningful manner is if it dropped significantly enough to cause concerns about bitcoin's security. for example if it was cut in (at least) half, that is >50% of miners shutting down. otherwise the small fluctuations are simply ignoreable specially when you consider the fact that we have absolutely no way of accurately measuring hashrate in short term.
obviously some small number of miners have indeed left after the halving but when you check the long term hashrate values (eg. monthly) you can see that there isn't really that much difference.