Heatwave causes the most significant decline in Bitcoin mining capacity since China’s ban
Bitcoin (BTC) miners are feeling the heat as the world contends with rising air temperatures that have enveloped several nations worldwide and are smashing century-long weather records in some of them.
Due to an unprecedented heatwave in Texas, the computational power required to run the sophisticated machines used for mining Bitcoin has fallen to its lowest levels since the Chinese government banned cryptocurrency mining in May 2022, according to a July 21 article by Bloomberg’s David Pan.
Hellish catastrophe for Bitcoin miners
As a result of the prohibition, Texas has supplanted China as one of the leading Bitcoin mining centres due to its more permissive crypto mining regulations and more inexpensive electricity.
However, the current record-breaking heatwave has had a detrimental effect on mining operations because of the damage it has caused to the mining machines’ chips, considerably speeding their depreciation rate.
The fall in Bitcoin difficulty, which measures how hard miners must work to validate transactions and mint the token’s finite quantity, is one of the primary signs of a decline in mining power.
Bitcoin’s mining difficulty has decreased by 5% in the last two weeks. In contrast, Bitcoin mining difficulty decreased by about 16 percent in May 2021 and remained at that level for two consecutive months.
Maintaining the electricity grid
Midway through July, most large-scale mining operations in Texas temporarily ceased operations in response to an ERCOT request to save energy because blackouts were “probable.” Consequently, one thousand megawatts of electricity were reallocated around the system.
Others could offset some of their losses or profit by selling electricity back to the grid at a higher price, with energy management firm Voltus estimating that this profit might account for up to 10 percent of a miner’s annual revenue.
As reported by Finbold, these miners have just resumed regular operations, only to find that the surging temperatures are destroying their equipment and limiting its lifespan.