Bitcoin Mining Power Sees Short-Term Fallback as Rainy Season Ends in China

After continuous growth over the past three months, computing power on the bitcoin network has seen a fallback as the summer rainy season trails off in China.

According to data from Poolin, the world's largest bitcoin mining pool by real time hash rate, bitcoin's seven-day average computing power has dropped to around 90 exahashes per second since Oct. 24, signaling that some miners have been unplugging from the network.

As a result of the power drop, data from mining pool service BTC.com estimates that bitcoin's difficulty - a measure of how hard it is to compete for mining rewards on the world's top cryptocurrency by market value - will decrease by 1.5 percent when it's set to adjust in about seven days.

Bitcoin's mining difficulty had reached an all-time-high at 13.69 trillion on Oct. 24, following a 38 percent increase since early August.

Mining difficulty is designed to adjust itself to go up or down about every 14 days, based on whether the hashing power on the network in the two-week cycle increases or declines, respectively.

As a result, some hydropower stations in China's Sichuan province - estimated to account for 50 percent of bitcoin's global computing power - no longer have the capacity to generate enough energy to support mining activities.

Miners without sufficient hydropower supply would have to shut down their operations or relocate to other provinces like Xinjiang or Inner Mongolio, where mining farms have a more stable, but more expensive, power supply generated from fossil fuel plants.

Further, bitcoin's sudden price drop on Oct. 23 to below $7,500 could have resulted in a large scale of shutdown of older but widely used mining models like the AntMiner S9 made by Bitmain.

That may soon be affected by the higher winter cost of electricity in China, as well as the scheduled halving of bitcoin mining rewards in May 2020 - before next year's rainy season.

According to a miner profitability index provided by Poolin and its rival F2pool, at bitcoin's current price and an electricity cost of $0.05 kWh, the mining profit margin of models like S9 is about 30 percent.