It doesn’t burn the circuits. It provides a pathway for electricity to flow. In a path that wasn’t intended by the engineers that built the device. This often results more power flowing than designed for. Too much power = a lot of heat = stuff burning.
So the water isn’t burning the circuits. Its creating a pathway for the circuits to burn themselves.
The device doesn’t have to be on because the device powering on is just it closing a “switch” to complete a circuit. If the water links the electronics together, it will bypass that “switch”, and allow current to flow anyways.
It can also cause oxidation that can break delicate printed circuits preventing current flow and disabling the circuit as well.
A power bank stores electric charge in it’s battery. There’s no such thing as “non-running batteries”, the closest you can get to that is having a completely discharged battery, which would be quite bad and kinda impossible to achieve with modern lithium batteries, as they require a minimum voltage level to operate properly, so you’ll always have some kind of electrical potential present.
Water may create a short-circuit that may lead to sparking (fire hazard), quick battery discharge which may generate heat, and generally cause damage to the device.
Water tends to be conductive (if it’s not deionized water). That means if it gets into a circuit, it can electrically connect components that were not meant to connect; a short circuit. If you say, connect the positive and negative lead of the battery, it will discharge as fast as possible, leading to uncontrolled overheating. Or it could connect across a microchip, and send 5V to something only meant to see 3.3V, which then fries the microchip. That’s why the ‘treatment’ for watered-electronics is to turn it off, remove the batteries, and then to dry it completely.
Tapwater and rainwater have impurities. These impurities can conduct electricity in places where it shouldn’t be going, which could directly kill a chip or other component.
Also, impure water can act as an “electrolyte” and cause “galvanic corrosion”. Basically, it can cause metals on the circuit board to rust or corrode. And then, this corrosion can also conduct electricity in places where it shouldn’t be going.
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