The spike follows a sharp decline in hash power in late October, which many analysts attributed to the end of the rainy season in the Chinese mining hub of Sichuan. The province’s abundant and cheap hydroelectric power is estimated to attract around 80% of Chinese miners during the wet season. In December, CoinShares estimated that Sichuan accounted for 54% of global mining activity.
Quantum Economics analyst Jason Deane speculated that the sudden increase in Bitcoin hash power could be a sign that many Chinese miners have completed their migration from Sichuan and restored operations in other local mining hubs such as Xinjian and Inner Mongolia. The sudden spike in mining activity suggests the network is likely to produce another significant difficulty adjustment.
A major upward adjustment would come at the chagrin of non-Chinese miners who have been enjoying boosted profits after October’s apparent migration from Sichuan resulted in a 16% negative difficulty adjustment — the second-largest downwards adjustment in Bitcoin’s history.