Mining farms in China hit by severe flooding

According to official publications and Chinese news in Sichuan province and four other regions, the amount of precipitation in two days exceeded the norm by several times. This caused the flooding. Chinese publications Golden Finance, China Daily, the English-language department of the CNS service argue that the disaster caused serious damage to the "earners".

Mining farms thrive in China precisely because they have cheap electricity from their coal and hydropower industries, and affordable equipment. Since it rains frequently in China, this has its advantages and disadvantages. To appreciate the damage done by rainstorms, you need to understand how these businesses work and how they work.
 

Mining farms in China

A mining farm is an ambitious industrial project that allows you to mine bitcoins. China has long been in a leading position, supplying the world cryptocurrency market with the necessary mining equipment. It is here that most of the worlds farms are located (70%). The capital of bitcoin mining is the province of Sichuan, where hydroelectric power plants are massively located that generate cheap electricity.

Approximately 30% of all Chinese miners are located here. In the province, the share of hydropower is 79%, while the countrys fossil fuel accounts for only 19%. This only confirms that hydropower is the most profitable raw material for mining. During the rainy season, energy production exceeds consumption on a domestic and industrial scale, which allows it to be spent on farms, mining billions of Bitcoin equivalent.

The largest mining farm in China is located on the continent, owned by the company NaoVTS. Its performance is much higher than the Hong Kong version: Bitcoin hashrate in 2017 was 4.7 PH / s. Thus, mining farms are located closer to energy sources or use cooling methods in working with cryptocurrency aggregates.
 

Why Sichuan?

The main factors affecting the placement of cryptocurrency mining enterprises in Sichuan province are:

    cheap electricity;
    few staff to service the equipment.

Chinese mining farms are located not only in the province, but also in other parts of the country. So, a huge enterprise is present not far from the center of Hong Kong - in the seaport of Kwaichun. It occupies a small room where many ASICs work. Thanks to the well-thought-out cooling system, the units are located very tightly, which saves energy.
 

Mining farm productivity

China has always positioned itself with cryptocurrency permissiveness, which attracted a lot of capital, investment in this industry and gave a huge trade turnover of electronic money. If at first the emergence of mining enterprises, the Chinese government did not look at this business seriously, then in 2018 measures were taken to restrict the circulation of cryptocurrency in the economic space. In this regard, bitcoin farms have increased their secrecy, therefore they are located in hard-to-reach places.

The National Business Daily (NBD) journalist got acquainted with the peculiarities of the operation of the enterprise owned by the Chinese company TianJia WangLuo. A special feature is its location inside the hydroelectric power station. Many mining devices (5800) have a capacity of about 40 petahash and bring 27 bitcoins daily. Not all of the hardware inside the plant belongs to the mining company because it is very expensive to buy.

But, according to the head of the enterprise, Mr. Lei, it is much more profitable to rent and receive income for maintenance, avoiding risks, reducing capital investment costs. He also explained that the profit from the farm depends on many factors (including natural disasters), but in a stable situation, you can, by purchasing equipment for mining, start earning income after a year. An NBD journalist estimated the profitability of the enterprise at 2 million yuan per year.
 

Flooding as a mining risk factor

Many media outlets, blogs, representatives of mining corporations do not assess the current situation as deplorable. There are farms that have been badly damaged, where tens of thousands of devices have been destroyed that cannot be restored. On Twitter and Telegram, the administrators of the Poolin mining pools published videos where the operator filmed a flood at one of the farms. The footage really shows a raging stream, washing away everything in its path, and workers who analyze the consequences of the elements.

China Daily, 8btc, Red Lee and editor-in-chief Lillian Ten reported that the mudflow disrupted communications and disrupted the flow of electricity to the region. There was a drop in the bitcoin hash rate during the day from 78 EH / s to 73 EH / s. Whether the destruction of some farms had an impact on this jump, no one undertook to argue. Moreover, it has been argued that this damage was less significant than in 2018.

The drop in the hash rate is more associated with the fact that a GPU is used for mining operations of the ether (graphic video cards do not require a special device). To mine Bitcoin you need a lot of integrals - ASICs.
 

Sichuan Province is the leader in production

Mining works on the basis of intensive use of computing power. Special devices process transactions and release new coins of the crypto network into circulation. According to Blockchain.com, the Chinese province of Sichuan is leading as a bitcoin mine due to a number of factors:

    cold climate;
    low cost of electricity;
    the ability to place a large number of equipment in a small room;
    a small number of workers to service the units.

The Chinese provinces, being the world leaders in bitcoin mining, are vulnerable to heavy rainfalls every six months, accompanied by floods. As a rule, this disables the mining equipment, and the owners of the mining farms incur losses. Another natural disaster, according to representatives of Chinas largest crypto investment corporation INBlockchain, did not harm the industry as a whole.