Floods in China’s Sichuan Province Slow Bitcoin Network Hash Power
Who knew bitcoin was as vulnerable to weather as it was to price swings? Floods in China’s Sichuan province have destroyed thousands of cryptocurrency mining computers, slowing the processing power of the bitcoin network.
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China’s History With Crypto
Thus far, the flooding has caused over $30 million USD in damage to homes, businesses, and crops. Dozens of people have been caught up in land and mudslides, with fifty reported deaths according to The New York Times. Over 8,800 others have required relocation assistance.
China’s attitude towards bitcoin and cryptocurrencies has not always been accommodating. Last February was particularly harsh when Beijing clamped down on cryptocurrency trading, and restricted access to cryptocurrency-related websites. Later came restrictions on digital currency exchanges to help enforce the earlier ban on initial coin offerings (ICOs). It seemed the future of crypto was over in the Middle Kingdom.
However, their attitude has eased over time. China began loosening its restrictions on digital currency activities three months later in May. Writing for the Global Times, author and journalist Xiao Xin stated:
“There’s an increasing belief that just saying no to bitcoin won’t be the eventual solution to the cryptocurrency issue. A more fundamental approach would be to embrace the new technology without putting the country’s financial system at stake.”
The Man in Charge Wants Crypto Innovation
The easing of regulations came by way of China’s President Xi Jinping, who has often commented that bitcoin — or rather blockchain, the technology behind bitcoin — could open the doors to newfound financial stability in China and influence innovation within the fintech industry.
“Xi has an interest in influencing the global flow of money,” explains reporter Yusho Sho of the Nikkei Asian Review, “He desires this power for China.”
How Bad Is the Damage?
Despite the numerous bans that have come and gone, China has shown support for bitcoin mining in the past, which makes this story so significant. Much of the country’s bitcoin mining takes place in Sichuan province. According to Golden Finance, the region currently processes over 70 percent of the country’s cryptocurrency transactions, and houses over half of China’s crypto-mining facilities.
Photos of the area now show hundreds of ruined machines. Golden Finance is also reporting significant drops in the overall processing power of the bitcoin network at various points during the flooding. A chart from Blockchain suggests a heavy fall in hash power.
Can China’s bitcoin mining operations recover from the floods? Post your comments below.
Images via Pixabay