The Christmas season brought a strong wave of cold in North America, especially in much of the United States. As a result, Bitcoin (BTC) network processing power, or hash rate, dropped by 40% over the holiday weekend. This occurred because the cold wave caused cuts in the electrical system, causing several mining companies to turn off their machines. The shutdown affected the network as a whole, which lost much of its power in a sudden way. According to mining pool BTC.com, BTC’s mining hash rate dropped by around 80 exahash per second (EH/s) between December 21st and December 24th. During this period, the total rate went from 232 EH/s to 156 EH/s. On Christmas Day (25th), the hash rate returned to the range of 250 EH/s. At the time of writing this text, the network has a total of 226.78 EH/s, about 2.24% less than that recorded on December 21st.
BTC hash rate in December, with emphasis on the big Christmas drop. Source: BTC.com.
Miners shut down machines
Foundry USA, the largest mining pool in the US, lost more than 50% of its hashrate on Dec. 23 – the biggest loss among major pools in the country – according to statistics from the Mining Pool Stats information platform. Companies such as Riot Blockchain and Core Scientific, which is undergoing Chapter 11 bankruptcy proceedings, have also reduced activity. In Texas, the main mining hub in the US, 99% of the industrial-scale BTC mining load was shut down as of 6 am on Saturday. Despite the quick recovery, the abrupt drop in the hash rate could have consequences for activity in the medium term. If the cold snap lingers, miners may have to shut down machines again, perhaps longer. Hash rate performance also impacts the difficulty of mining new BTC, which can increase or decrease. With the drop, the mining difficulty is estimated to drop by 7.23% in the next adjustment, scheduled to take place on January 4th. If confirmed, this will be the second biggest difficulty drop in mining in 2022, behind only the 7.32% recorded on December 5th.
unusual cold wave
The United States and Canada were hit by an unusual Arctic storm, which dropped local temperatures. According to weather services, the cold reached extremes of -45°C in the state of Montana, and covered the state of New York with up to 43 inches of snow. At least 37 people died as a result of the storm, CNN reported. The extreme cold caused a spike in demand on the power grid because of increased heating. Faced with the extreme scenario, miners decided to turn off their machines. The practice, known as tapping, is touted as a way for miners to help power grids. In fact, mining represents one of the highest consumptions of energy, as the machines are turned on 24 hours a day. This demand ensures that energy producers continue to generate revenue to offset costs. However, it can be harmful at peak times, such as what has occurred in recent days. As a result, miners may shut down when demand from other sources is high, such as during winter storms. Dennis Porter, coordinator of the Satoshi Action Fund, an NGO that defends cryptocurrency miners, said that the reduction is proof that they are supporting the power grid. In other words, that miners are partners in the electrical system, not enemies. On the other hand, Denis Rusinovich, a miner based in Europe, went further. In his view, mining activity needs to ensure more decentralization. Currently, most of the BTC hash rate (almost 38%) comes from the US. “(The cold snap) Another confirmation that bitcoin’s geographic diversification is vital,” he said.
