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.
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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%.
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.
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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
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