Devastating Floods in Sichuan Wipe out Crypto Mining Farms

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Sichuan province in China is known as the crypto mining center of the world, with virtually all of the large Chinese mining giants having some sort of presence in the region. Thanks to its abundance of low-cost power, it has attracted hundreds of mining firms. However, the very same water that provides these firms with low-cost power also has the power to destroy their mining farms in the blink of an eye.

Heavy storms have bettered the Sichuan province over the weekend, flooding and destroying swathes of crypto mining farms in the process. Back in July last year we saw heavy storms that had a similar impact, and it doesn’t look as if miners upgraded infrastructure as they suffered the same fate once more.

Mudslides Wiping Our Entire Farms

Continuous rainfall during monsoon season has saturated the ground to a dangerous point where mudslides are increasingly likely to happen. In harrowing footage, Poolin – a large Chinese crypto mining firm – showed the devastating effects of the heavy rain and flooding. In the video, a huge mudslide can be seen forming in the distance and quickly making its way towards the building. If any crypto mining rigs were on the bottom floors of the building in the video, it’s safe to assume they’re never going to work again.

In a second video, Poolin showed workers digging out crypto mining rigs from the mud that settled following the huge mudslide. Sichuan province may very well be perfect for miners thanks to its low-cost power, but many of the buildings are outdated and mining firms fail to upgrade these buildings in favor of maximizing short-term profits.

Hash Rate Taking a Hit

Last year when we saw floods of a similar magnitude, the Bitcoin network hashrate took a nosedive. It was where Bitmain started losing its footing, falling from over 45% of the total hash rate down to around 36%. Around the time of the floods, the total network has rate fell 14 million TH/s and remained this low for well over 24 hours. Miners around the globe quickly saw the dip in hashrate and diverted power to the Bitcoin network, causing it to spike up to a new all-time high of 82 million TH/s.

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A huge 77.6% of all energy used in Bitcoin mining comes from renewable and green resources like hydroelectric power, but these dams are located in wet parts of the planet. This means these regions see huge amounts of rainfall and are prone to flooding. In underdeveloped regions like Sichuan we see tragedies such as loss of life and destruction of property. While mining in these regions can be incredibly profitable, it still remains incredibly risky.