Bitcoin, the world biggest cryptocurrency, fell as much as 14% to $51,541 on Sunday, reversing most of the big gains it made over the past week. Data website CoinMarketCap cited blackout in China’s Xinjiang region, which reportedly powers a lot of bitcoin mining,for the selloff.
About the outage;
China’s Xinjiang province powers a huge chunk of Bitcoin miners. With this blackout, the BTC has rate collapsed significantly leading to further price correction. The blackout in China’s Xinjiang region caused almost half of the Bitcoin network to go offline in 48 hours. This blackout was due to maintenance after the massive flooding and security issue at power stations in China.
Some widely-followed blockchain analysts pointed to a sharp drop in hash rate due to the outage. Hash rate refers to the volatility index that measures the processing capacity of the entire Bitcoin network, and it determines the power required by miners to produce new Bitcoin. Typically shocks to hash rate do not cause price drops. A hash rate reduction slows transactions, which ironically makes it harder to move coins to exchanges for sale.