Late last week, the Bitcoin network experienced a hashrate shock as a number of coal plants were abruptly shutdown in Xinjiang province in China after an accident that at a plant that caused onsite deaths. Many are estimating that this has led to about 25% of total hashrate exiting the network which has, as should be expected, increased the amount of time between blocks and caused fees to rise significantly.
As it stands at block 678,807, blocks have been coming in every thirteen minutes and thirty seconds on average since the last difficulty adjustment and, if hashrate remains static between now and the next adjustment, we will see a 25% decline in difficulty on May 1st. This would be the largest downward adjustment in the history of the network.
Our friend Kevin Zhang from Foundry seems to believe that a lot of the miners that were taken off the network due to the power plant shut downs should be back and hashing within 1-2 weeks. The economic incentive is too strong to keep these physical bitcoin options on the sidelines in this current market. Also, this may just expedite the great ASIC migration that happens every year as rainy season in China begins, providing excess hydro power throughout some provinces.
This incident is an illuminating case study for the bitcoin mining industry for many reasons. It helps the industry get some insight into how much hashrate is being produced in China. It gives some insight into how reflexive the fee market is to hashrate shocks that slow down block production. And it will also provide some data into how nimble miners can be. If Kevin's inclination is correct and a good portion of the miners who were forced to shut off their equipment are able to plug back in within the span of a couple of weeks that would prove the mining market is extremely mobile and, therefore, resilient.
From the discussions I've seen over the weekend, this event is leading many in the industry to conclude that there may not be as much hashrate concentrated in China as many believe. It is still a considerable amount, but the fact that the total amount of hashrate may be less than previously expected is very bullish. It would prove that Bitcoin is becoming more geographically distributed over time, which is exactly what bitcoiners want to see. We here at the Bent will be covering the hashrate shock throughout this difficulty epoch to keep you freaks abreast of the situation.
Missed my first Bent in a couple of years on Friday. Not going to lie, it stung a bit. This rag doubles as way to keep you freaks informed about Bitcoin and Liberty-related topics and a personal challenge to myself write as much as possible, and I fell short on Friday. My week didn't feel complete last week.