Bitcoin Mining Power Declines; Average Hashing Power Reduces to 90 EH/s
Bitcoin’s seven day average mining power suffered a drop in the week bygone to 90 EH/s from 97.90 EH/s on 24th October. The drop comes after the mining power saw three months of continuous rise.
According to Chris Zhu, the co-founder of Poolin, the reason for this decline is surprisingly unobvious – the end of the rainy season in China.
Due to a shortage of hydropower supply, some hydropower stations have been unable to generate sufficient power to support the mining activities in China’s Sichuan district, which is estimated to account for almost half of bitcoin’s global computing power.
Facing power shortage, many miners are finding it difficult to carry on mining activities. The cost of electricity has gone up from $0.04 per kilowatt-hour (kWh) in the summer to around $0.05 now which could explain why some miners are unplugging from the network.
It was previously expected that the hash rate would go above 100 EH/s by the end of 2019.
The drop in hashing power is expected to result in a decrease in bitcoin’s difficulty – a measure of how hard it is to compete for mining rewards – by around 1.5 percent. The difficulty was at an all-time high on October 24 at 13.69 trillion. The timing of the jump of almost 38 percent since August was largely driven by the rainy season in China. The abundant supply of cheap hydroelectricity had led to an increase in the mining power.
With the electricity costs expected to surge in the winter months in China, the hashing power might see a further decline. While there are companies such as INBCTC (sister company to Poolin) that are making efforts to combat the impact of the foreseeable rise in electricity prices by allowing S9 miners to generate a higher ratio of hashing power over electricity used, it is yet to be seen whether such efforts will have any noticeable impact.