Sichuan Rainy Season to Give Bitcoin Hash Rate a Much Needed Jolt

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 mining.

The rain in Sichuan is a good sign for all local farmers, Bitcoin miners included.

As a result, mining becomes increasingly profitable, which can lead to an increase in the overall hash rate.

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.

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."

According to a local crypto news outlet, some Bitcoin mining farms in Sichuan switched off earlier this month against the backdrop of electricity shortages.

The impact from the block reward halving will be partially absorbed by the lower cost of power, Zhang went on to add, outlining the current trends among Sichuan Bitcoin miners that many of the facilities have contracts with power plants outlining a minimum level of electricity usage.

Overall, the mining sector in China has been experiencing problems in recent weeks with the combination of COVID-19-related restrictions, slashed revenues and price volatility; for example, Canaan, one of the main China-based mining players, recently reported a $5.8-million Q1 loss and cut the price of mining hardware sold by up to 50%. Ian Descoteaux, the head of mining at Bitcoin.com, does not think there will be an increase in the hash rate "Considering we are not even settled yet after the halving" either in his view, the rainy season will at least help to prevent further drops in Bitcoin's hash rate.

"We will see a significant increase in hash rate when the S19 from Bitmain finally ships during the summer. The S19 is a significant improvement over even the S17. So, while miners are not really deploying more power, the overall efficiency gain of the network will result in greater net hash rate number."