The post-halving reality of Bitcoin’s network may soon change shape, some industry insiders argue. The reason is quite simple, and, surprisingly, it has nothing to do with crypto itself: The wet season has arrived in Sichuan, a southwest China province known as one of the hottest spots for Bitcoin (BTC) mining.
The rain in Sichuan is a good sign for all local farmers, Bitcoin miners included. The abundance of water leads to a hydropower supply glut, which, in turn, makes electricity prices — miners’ main burden — decrease. As a result, mining becomes increasingly profitable, which can lead to an increase in the overall hash rate. But is it possible for a single Chinese province to drive up the entire Bitcoin network amid slashed rewards?
The go-to place for mining
According to the latest data from the Cambridge University’s Centre for Alternative Finance’s Bitcoin Mining Map, Sichuan accounts for 9.66% of the total BTC hash rate. It is worth noting that the southwest province is not even currently the main mining spot in China, trailing Xinjiang, the desert region which represents as much as 35.76% of the global Bitcoin hash rate.
However, the distribution of hash power within China changes every year between May and October when the wet season begins in Sichuan. Local players then begin to migrate en masse from Xinjiang, Inner Mongolia to Sichuan and Yunnan to take advantage of the lower electricity rate. Leo Zhang, the founder of Anicca research, told Cointelegraph:
“Over the years, the mining industry started to organize itself around this schedule. Manufacturers do their product announcements in May. Facilities offer their special deals right before the rainy season begins.”
It all comes down to Sichuan’s intensive hydroelectricity sector. In 2019, the province reportedly produced 78.2 gigawatts and exported 104 billion kilowatt-hours, which constitutes around 30% of its total output, to other domestic regions. According to the Chinese mainstream press, the ample hydropower energy during the rainy season, as well as the cool climate in its mountainous areas, has made Sichuan “an ideal destination for miners.”