The Coronavirus has compounded supply shortages and money woes, making Bitcoin mining in China suspended

By Selena On Mar 9, 2020

It seems that China is gradually regaining itself from the Covid-19 outbreak when Coronavirus is now more prevalent in Asia. Several businesses across the country are also recovering. However, Bitcoin mining has been severely affected and could cause more losses.

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Bitcoin mining in China has been suspended due to the outbreak of the Coronavirus

Due to the recent outbreak of the Coronavirus in China, the government has implemented a series of bans to control the situation. Thousands of Chinese businesses are affected. With the current situation of disease control, people cannot return to work.

A typical example is a Bitcoin mining farm that is being forced to close. According to Jiang Zhuoer, executive director of BTC.top, all miners were forced to halt. At the same time, mining rigs companies in China are delaying after-sales services.

The two giants Bitmain and Canaan, are the other largest chip makers in China. But because of the recent Coronavirus epidemic, leading companies such as Bitmain, MicroBT, and Canaan Creative had had to announce official delays in services.

Because of the strict quarantine work, mining rig manufacturers such as Beijing-based Bitmain and Shenzhen-based MicroBT have been unable to ship new equipment to mining farms, which are primarily located in the northwest of the country (where there is a lot of hydroelectricity.) And supply chain hiccups could be the reason for the hash rate of Bitcoin stalling last month.

Besides, the shipping delay of 7-nanometer chips from Taiwan-based manufacturer TSMC. High demand from the likes of Apple and Huawei caused the chipmaker to postpone its delivery from 2019 to early 2020. The new chips are denser, more powerful and require less power, and are in high demand among miners.

We are all sitting on a fire

If the price of Bitcoin does not change or decline further, mining becomes less profitable, putting unbearable pressure on smaller, independent mining companies. And things will get worse if Bitcoin prices keep going down like this until Halving.

This looks like a storm for everyone except for large mining operations. Virus and its consequences make many people exploit unexpectedly. Those who do not upgrade soon enough are now facing catastrophic consequences. Some observers say that this collective upgrade will lead to a mining disaster for many farms, which are still recovering capital costs from the purchase of their old mining rigs. What’s worse: the new chips on the block also boost the hashrate, making it more energy-consuming for older people to mine BTC.

Naturally, some observers believe that a mining disaster can be avoided. Even if prices fall, miners won’t lose everything because sophisticated operators have regained their infrastructure costs over the past three years. That is the useful lifespan of 16nm chips. So they should be able to afford sunsetting outdated equipment.

While mining companies are affected by short-term price fluctuations, experienced people understand that to be genuinely profitable, and you need to be in it long term. Similarly, newer financial instruments, such as derivatives from Bitmain and Canaan, function to protect sophisticated miners from price disasters. Digital commercial bank DAG Global is providing innovative ways for operators to prevent hashrate volatility. Although the derivative market for mining companies is not yet mature, and no one knows whether there is enough liquidity.

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