Bitcoin Crashes after Accident in Xinjiang, China Halts Mining Operation
Bitcoin’s hashrate dropped 25% from all-time highs after an accident in the Xinjiang region’s mining industry caused flooding and a gas explosion, leading to 12 deaths with 21 workers trapped since.
Dangerous Mining in China
Reportedly, an industrial accident in the Fengyuan Coal mine on Apr. 10 led to under-ground flooding of the facility trapping 29 workers 1,200 meters underground. Eight of these workers were rescued on Monday.
The rescue team is pumping water out and air inside the tunnels to bring the remaining workers out safely.
The country’s mining industry is riddled with unsafe operations and frequent accidents that are drawing nationwide attention. Last year the country reported 434 mining accidents with 573 deaths.
Thomas Heller, the co-founder and chief business officer at Compass Mining, reported that “mining farms in Xinjiang closed this morning for inspections.”
The hashrates have since dropped from all-time highs near 220 Eh/s to 165 Eh/s, last updated on Friday around 10 am UTC.
The leading Bitcoin mining data centers in the region have closed operations to comply with the fire and safety inspections.
The Chinese central authority is conducting site inspections “on individual mining operations and related local government agencies,” tweeted Dovey Wan, partner at Primitive Crypto.
The data centers are plug-and-play sites that provide Bitcoin miners’ infrastructure, who only need to connect their devices and start mining.
This helps miners migrate from one part of the country to another to benefit from seasonal changes in electricity prices. For example, during the rainy season between May and October, miners favor the Southern Chinese provinces over Xinjiang and Mongolia.
The 25%-30% shock to the total network’s hashrate is causing pressure on BTC price as well. The hashrate of the top five mining pools has dropped between 10%-35%.
The accident has reignited the centralization problems arising from China’s dominance of the Bitcoin mining sector, despite global expansion efforts.
Bitcoin’s price fell $3,000 to $60,500 this morning.
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Author: Nivesh Rustgi