COVID-19 Effects on Bitcoin Mining Industry
Riot Blockchain recently filed a report saying that it’s possible that COVID-19 could have serious effects on their business. Is the crypto mining industry in danger?
A lot of Manning hardware is manufactured in China and with this pandemic that means that if something breaks down there is no chance to get all the necessary details, and that stops the whole process. Also, there is a big proportion of mining hash power and the actual mining work that goes into protocols like bitcoin that are coming out of China. There is a lot of other companies not located in China that are upgrading their production because of the upcoming halving to service miners who want to increase the amount of hash power that they are throwing. Miners are constantly trying to upgrade their efficiency so they could get the largest possible share of the reward pool. And now because of COVID-19, there have been abrupt decrees of growth in hash-rate power traditionally this number usually went up. Since the COVID-19 has spread through the whole world it has frozen all supply chains. With that being said it means that the whole mining process will be slowed down by 50% I don’t think that it means that the Crypto mining industry is in danger that only means it won’t be as profitable as it used to be before COVID-19.
What effects could this have on (f.e.) the Bitcoin network? Is there cause for concern?
The network will be slow but it will be functioning. There are concerns for less profitable miners because they will basically be turned off but because they won’t be in the market anymore bigger miners will be more profitable. Because Bitcoin mining is less dependent on humans than other fields of similar services that means that the possibility of contact with this virus is very small even for those few maintenance employees that work for bitcoin miners.
How can mining companies combat the effects of coronavirus?
Well, there is really nothing much you can do if you run out of spear details for your machines. For the future miners, advice could be – keep spare details for a rainy day in the storage. There are other supply chains that will be affected a lot more than the Bitcoin mining industry. with that being said I don’t think there is much that can be done but I don’t think that there is a reason to be so worried as well. Others have it worst. So let’s be humble and safe in these hard times.
What have the most visible effects of coronavirus on Bitcoinbeen? The most “invisible”?
The most visible effect of coronavirus on Bitcoin is the huge drop in the price of bitcoin. Bitcoin’s price action has followed closely in line with regular markets, surprising many and damaging the notion of bitcoin’s lack of correlation. Because people are scared of losing their assets, traders holding Bitcoin as a speculative, high-risk asset would naturally abandon their positions to get their money out. Since we saw EVERYTHING drop, including gold, this is not that surprising.