On April 15, a widespread power outage in North China led to a sharp decline in the Bitcoin hash rate. Because major mining farms are located in China, there was a 20% corresponding decline in hash rate.
The China Hash Rate Crash Of 2021
As a result of the decline in hash rate, backlog in transaction processing quickly surged, causing a mounting transaction fee. With the high mining fee, Bitcoin miners have earned nearly $16.7 million in just 24 hours.
Wu Blockchain noted in a tweet earlier today:
“Bitcoin miners’ fees have increased significantly. The fees paid to Bitcoin miners in a single day amounts to $16.76303mln. The core reason is that the power outage and inspection in Northwest China has reduced the 20% hashrate, resulting in a backlog of transactions.”
It appears that as a result of the backlog, some users increased their miner’s fee to speed up their transactions.
“There are many unpackaged transactions in a short period of time, causing transactions to be queued, and the number of transactions that the network can process within a certain period of time is limited. Users who are anxious to transfer will increase the miner fee,” Wu Blockchain added.
Related Reading | Supply Crunch Coming, Bitcoin Miners Stop Selling
The limited the number of transactions that could be processed and verified at the time. Hence, many transactions were held up in the blockchain, pending for over 9 hours. Many analysts have attributed the recent price correction to the mining outage in China leading to a new concern about the impact of power outage on BTC and the blockchain at large.
Controversy started when many claimed that the Bitcoin network’s hashrate dropped by 40% on April 18, however, others pointed out the fact that the Chinese power outage took place on April 15 and the drop in mining hash power was not more than 20%.
The Bitcoin hashrate dropped abruptly. Price soon followed | Source: BTCUSD on TradingView.com
Bitcoin Is Slowly Bouncing Back
Since the power outage, the topic of mining power deficiency has continued to be a heated discussion in the crypto community. As Bitcoin retraced from a new all-time high of $64,683 to fall to around $54,000 as exchange supply of BTC is seeing a continuous decline.
Bitcoin Price is currently consolidating above $55,000 with support holding at $54k. However, the nearly 10% drop on April 18 was nothing out of the ordinary as the king cryptocurrency has seen above 25% drop during the current bull rally. To compare, 2017 had price dips ranging from 10% to 25%, which occurred about 6 times. While the current bull run has only experienced one of such major pullback.
Related Reading | Bitcoin Price Nosedives $5k, Why BTC Could Extend Losses
According to Rekt Capital, the fall from the new all-time high has not affected the bull trend of the coin.
In 2017, #BTC had 5 major Bull Market corrections that were -30% to -40% deep In 2021, BTC only had one -31% Bull Market correction Now $BTC is down -20% from its ATHs of ~$65000 #Bitcoin has gone much lower and yet still kept its Bull Trend
It appears that Bitcoin is still far from its top and a surge above $65,000 should be expected soon despite the retracements.
Featured image from Deposit Photos, Charts from TradingView.com