China is currently suffering from the worst floods since 1998 when heavy rainfalls damaged and destroyed more than 13 million homes and left a death toll of over 3,700. Considering the fact that a huge chunk of Bitcoin mining is carried out in China, the industry is on edge.
Since June, strong rainfalls are causing the flooding of several regions along the Yangtze River. The number of affected citizens could be as high as 45 million, becoming one of the worst monsoon seasons in recorded history. At least 400 Yangtze tributary rivers have overflowed and 15 million have been evacuated in July.
Rainfall in China is around 12% higher than in the same period last year. China’s ministry of emergency management estimated direct damage close to $12.3 billion, and Chinese state-backed news outlets have criticized Western media for ‘hyping’ the collapse of the Three Gorges Dam.
The Importance of the Dam
The punishing flood season is fueling new concerns that the world’s largest hydroelectric gravity dam may be under too much stress. The Three Gorges Dam is one of the biggest milestones of human engineering and can hold more than 40 cubic kilometers of water.
NASA even calculated that the amount of water accumulated by the dam would increase the length of the day by 0.06 microseconds and shift the positions of the poles by two centimeters.
The dam was designed to help tame the Yangtze River and produce a vast amount of cheap electricity.
According to the Chinese government, it has reduced flood peaks, minimized economic losses, and slashed the number of deaths and emergency evacuations.
The Dissonant Voices
Some critics are pointing out that the dam isn’t performing as good as proclaimed. David Shankman, a geographer from the University of Alabama who has studied Chinese floods for years, said:
One of the major justifications for the Three Gorges Dam was flood control, but less than 20 years after its completion we have the highest floodwater in recorded history.
The fact is that it cannot prevent these severe events.
A Chinese geologist and outspoken critic of giant dam projects, Fan Xiao, declared that the storage capacity at Three Gorges amounts to less than 9% of average floodwater.
It can only partially and temporarily intercept the upstream floods, and is powerless to help with floods caused by heavy rainfall in the middle and lower reaches of the Yangtze River.
Fan argued that the Three Gorges and other major dam projects could make flooding even worse, as they change the flow of sedimentation downstream. He also thinks that the need of producing electricity has been a higher priority than flood prevention.
When people only consider using reservoirs to solve flood-control problems, they often overlook or even weaken the natural ability of rivers and their lakes to regulate floods.
Bitcoin Miners Brace for the Worst
Most of the biggest Bitcoin mining operations are based in China. Many of them are located directly downstream from the Yangtze river, as the hydroelectric power is harvested for these huge operations.
If the floods keep up during the coming days or weeks, Bitcoin miners might see cuts in their precious electrical supply. Even if the electric infrastructure withstands the water damage, energy prices could go up.
Either of these scenarios would most likely impact the profitability of the mining operations, not only of Bitcoin but any other minable digital assets. Changes in electricity or profitability could have an impact on Bitcoin hash rates, which recently hit an all-time high on July 8.
This is not the first time that natural disasters have had posed problems for the cryptocurrency industry. Both in 2018 and 2019, mining farms in Sichuan were affected by torrential rains and flooding. The incidents had varying effects on the hash rate at the time.