The current electricity challenge in China might have contributed to the decline in the Bitcoin network hashrate. Many Chinese crypto miners have been asked to stop mining operations at the moment, due to the low energy production in the country, as Blockbeats reported.
China sees relatively dry season
Since this year, China has experienced more dry weather than the rainy periods, which is reportedly resulting in low electricity production. Many thermal power plants in the country are being overworked since the water inflow in the river basins of the provinces has lowered, with that of Sichuan dropping 20 percent.
Regardless of the declining power production, the consumption rate in the country has increased by more than 20 percent. To this effect, the electricity cost in China has reportedly increased, and the government has asked most of the Chinese crypto miners to halt mining operations at the moment.
Chinese crypto miners told to halt operations
The notice to halt operations is coming at a time when the Bitcoin mining rewards have been reduced by half. According to Thomas Heller, one of the executives at F2Pool, the development is a worrying sign for Chinese crypto miners. Heller further noted in a tweet:
Due to the high temperature in Chengdu in recent days, priority for elec. has been given to residents rather than mining farms. This is why we saw a further drop in network hashrate a couple of days ago.
Notably, 60 percent of the entire Bitcoin network hashrate comes from China, and the mining activities are concentrated mostly in the southern provinces, which usually experience the rainy season sometime in April. Perhaps, the not-so-rainy condition has probably affected hashrate, coupled with the fact that many miners have been forced out of the market.
Expect normalcy by month-end
As per Heller, however, the flood season in the province is yet to come and will return the cost of electricity to normalcy for the Chinese crypto miners.
Hydro season in China is always unpredictable. This year, all-in hosting prices are 5-10% cheaper than last year (around $0.03 – $0.033 this year). The hydro season is anticipated to start around May 25.