How the coronavirus affected Bitcoin mining

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There is a controversial opinion that the first cryptocurrency is controlled by China. If this is true, the epidemic that is spreading in the country may change the value of digital money and its hash rate in the nearest future. Chinese companies are leading in the production of mining equipment and Bitcoin mining. Two of the world’s largest firms, Bitmain and Canaan, are located in China. In total, according to various estimates, more than half of the computing power that is used to obtain the first cryptocurrency may operate in this country.

Any news about quarantines, new bans, or the spread of coronavirus can have an impact on the mining market. And it is already happening: earlier in February, the founder of a large bitcoin pool BTC.TOP Jiang Zhuoer said that the police officers came to one of his largest farms and demanded the production be suspended.

Zhuoer also reported problems with returning employees to work due to the epidemic. In turn, the head of Canaan predicted a rise in the price of new equipment in February-March together with delays in its delivery.

The disease began to spread in China in December, but so far the hash rate of the first cryptocurrency has not responded to this event in any way. Since the end of last year, the indicator has gradually increased, reaching a new record level of 126 EH/s in mid-January, and now it is at 121 EH/s.

The cost of second-hand equipment has dropped completely in the run-up to the May halving, as, after a two-fold reduction in the block reward, it will become unusable. However, it does not make sense to buy such devices, since they will not be able to pay off in the next three months, and in the future, they will only bring losses.

BitCluster founder, in turn, is confident that the coronavirus has not affected the mining business in any way. The expert said that Bitmain ships equipment from Malaysia, the chips are made in Taiwan and Korea. Whatsminer has released a new model of cryptocurrency mining equipment and accepts orders for it in the normal mode.

“The only thing that was canceled is special events in China. So far, we have not experienced any problems related to the development of the coronavirus epidemic. We hope that it will be over as soon as possible,” he added.

CEO of Bitfury has a different opinion. According to him, most manufacturers whose factories are located in China have already temporarily stopped production due to the epidemic. If the situation develops, this will inevitably lead to at least delays in deliveries, and, perhaps, to a shortage of equipment and an increase in its cost, the expert believes.

He emphasized that the first signals indicating in favor of the risk of a shortage of miners are already being observed in the market. In this situation, the network’s hash rate growth opportunities will be limited even if the bitcoin exchange rate increases.

“If the situation worsens and the Chinese authorities are forced to take more serious steps that will lead to the shutdown of mining farms, the hash rate and complexity of the network may fall. If this is superimposed on the further growth of the bitcoin exchange rate, the profitability of mining can significantly increase, as well as the price of equipment,” the expert predicted.

Head of Exan.tech, on the contrary, is sure that the coronavirus did not affect the work of the largest Chinese mining farms in any way, and large farms are working in the same mode. He explained that if they were closed, there was a drop in the hash rate of the BTC network. But even if the situation with the disease worsens, and farms really begin to close, the decrease in complexity can be compensated by other miners, and this is unlikely to affect the Bitcoin exchange rate, the expert is sure.

CEO of the Six Nines data center shares a similar opinion. He said that the possible fall in hash rate for major currencies due to the shutdown of Chinese farms will lead to the fact that digital money will be double easier to extract, and the profitability of mining will increase by almost 100%.

“As a result, everyone will start buying video cards and miners, and then the situation will stabilize. Further options are possible: either the price of coins will be adjusted, or the mining capacity will gradually increase in other regions. The Chinese with their equipment are already moving to other countries, in particular, to Sweden. Relatively speaking, the hash rate will normalize in three months, but by this time the market may experience increased volatility,” he said.

Most mining experts say that the situation with the coronavirus has not affected the market yet. However, if the epidemic continues to spread, it can lead to a sharp drop in hash rate for a certain period of time followed by a restoration after a few months. At the same time, in May, the halving will take place — the reward for the extracted block will be reduced by half, which means the blockchain industry will face a new shock.

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