Mining activity has decreased in China, although electric service is cheaper during the rainy season and the proximity of halving.
There are few days left for the halving of Bitcoin, which will be this May 12th, 2020. At the same time, the rainy season began in China, which is when there is an excess demand for bitcoins. However, this year the amount of mining activities has decreased.
Mining activity has already completed 627,000 blocks. Now, it remains to mine only 3,000 blocks and it seems that users in China are not spending time on this activity, even though the halving reduces the number of bitcoins per block. This event, which will be on May, could boost an increase in the price of this digital asset.
One of the strongest reasons that this decrease in crypto mining activity could have been Covid-19, the respiratory infection declared as a pandemic that, until April 28th, has generated 4,637 deaths in China and some 83,938 cases in that country. worldwide 214,392 deaths and 3,050,453 confirmed cases.
Rain and Bitcoin
In China, the rainy season generates excessive hydroelectric power. In this way, electricity becomes a cheaper service during this time and, therefore, mining is a more profitable activity.
When rain abounds in China, the price of electric service is lower. But, besides, in the mining facilities located in the southwest provinces of China, the service is up to 20 % cheaper even in the summer. This is a regional government plan to attract more crypto investors from Bitcoin mining.
Mining in China is so active that research firm CoinShares estimates that 65% of Bitcoin’s Hash Power is concentrated in China. Besides, through a report, CoinShares highlighted that only the southwestern province of Sichuan represents more than 50% of the total network.
Decisive Days
Many miners prepare for halving. This activity that takes place every four years and reduces the number of bitcoins per block by half could generate two possibilities: economically benefit the miners or leave them trapped in the problems of lack of profitability.
The largest mining manufacturers in China are improving production capacity and introducing new ASIC hardware, with better energy efficiency ratios. Meanwhile, miners are also looking for new mining farms, and companies within the Bitcoin mining space are looking for new opportunities.
“If the price of Bitcoin does not rise after Halving, who will buy new equipment to meet this demand?”, Huang Fangyu, Co-founder of ValarHash, says.
But if Bitcoin’s price stays around USD 7,000, as it is at its current price, the crypto community expects older mining equipment to shut down after halving. This is something that would lead to a decrease in network hash power.
Some companies in China are currently returning to work after Covid-19 quarantined them for nearly four months to prevent further spread.
“For those who have access to extremely cheap electricity during the summer, they could still accumulate those reserves to earn money quickly in the summer and survive halving”, Fangyu added.
The truth is that, although the price of Bitcoin has already recovered from the fall it suffered in mid-March, due to the collapse in international markets caused to the coronavirus, it is not yet known if halving will help to raise the price of the main one. cryptocurrency or not.
For now, miners, mining farm owners, and mining machine vendors are gearing up for this important event that is less than two weeks away from happening.
By María Rodríguez
