  Free-space satellite communication has significantly lower photon loss than
terrestrial communication via optical fibers. Satellite-based quantum key
distribution (QKD) leverages this advantage and provides a promising direction
in achieving long-distance inter-continental QKD. Satellite channels, however,
can be highly dynamic due to various environmental factors and time-of-the-day
effects, leading to heterogeneous noises over time. In this paper, we compare
two key distillation techniques for satellite-based QKD. One is the traditional
{\em non-blockwise} strategy that treats all the signals as a whole; the other
is a {\em blockwise} strategy that divides the signals into individual blocks
that have similar noise characteristics and processes them independently.
Through extensive simulation in a wide range of settings, we show trends in
optimal parameter choices and when one strategy provides better key generation
rates than the other. Our results show that the blockwise strategy can lead to
up to $5\%$ key rate improvement (leading to on average $1.9\times10^{7}$ more
key bits per day) when considering two types of blocks, i.e., for nighttime and
daytime, respectively. The blockwise strategy only requires changes in the
classical post-processing stage of QKD and can be easily deployed in existing
satellite systems.
