Data Verification: Why the decline in hash rate in Xinjiang may be overstated.
In a risk-averse market, even a small shock can trigger tremendous FUD.
The cryptocurrency market has seen this pattern repeatedly. For example, Donald Trump's announcement of tariffs in October led to a staggering liquidation of $19 billion, marking a key turning point for the rest of the fourth quarter.
A similar scenario seems to be forming now. Reports of renewed crackdowns on bitcoin mining in China have sparked new FUD. The story gained momentum after the bitcoin hash rate dropped by about 8%, raising market concerns.
However, many dismiss this as mere "speculation."
To clarify, the story began to spread after Jack Jianping Kong posted on platform X that bitcoin mining in Xinjiang was under scrutiny. Two days later, he claimed that at least 400,000 miners were shut down in China.
Thus, the post was used as evidence of a widespread shutdown. However, with the bitcoin hash rate dropping by 8%, it begs the question: was this just a coincidence, or could it point to the beginning of another market-moving event?
## Tracking Bitcoin Mining Pools to Separate Noise from Reality
The bitcoin hash rate dropped sharply, but the story is more complex.
The question is whether the decline came solely from Xinjiang, suggesting a Chinese crackdown on bitcoin mining. To help answer, the chart below highlights the bitcoin hash rate as reported by various mining pools.
Notably, most of the large declines came from North American pools like Foundry USA, which collectively lost 200 exahashes/second. Meanwhile, Chinese pools like Antpool and F2Pool dropped by about 100 exahashes/second combined.
Simply put, the mining shutdown in China seems overstated.
In fact, by December 18, most pools had returned to nearly normal levels, indicating that the decline was temporary. At the same time, some miners may have temporarily shut down their equipment to avoid inspections.
Overall, the data indicates a short-term disruption rather than a major shutdown of bitcoin mining. This highlights another moment of FUD and a reminder of the importance of diving into the data before following the "noise."
---
## Final Thoughts
* The decline in the bitcoin hash rate made headlines, but most pools recovered, indicating that the drop was temporary and not a complete Chinese shutdown.
* Initial reports of a 100 exahash/second loss were exaggerated, highlighting the importance of carefully analyzing data before responding to market noise.
