In the last two weeks, the modernization of the mining facility for Chinese miners has slowed, which has also resulted in stagnation in mining activity. The reason for the slowdown is the incidence of coronavirus in China.
Effect of coronavirus on cryptocurrency mining
After the virus outbreak forced the Chinese authorities to declare quarantine and other restrictions in the area, mining equipment manufacturers were forced to suspend production and subsequent transport of the equipment to the miners. Miners cannot expand and modernize their farms.
Bitcoin is designed so that every two weeks the mining difficulty adapts to the amount of processing power currently connected to the bitcoin network. When more miners join the network, the difficulty increases. On the contrary, as some miners leave the network, the difficulty will decrease.
Jason Wu, co-founder and CEO of DeFiner, commented on the crypto currency mining situation in the following words:
“Many miners have gradually phased out older equipment and bought new and more powerful models as we are slowly approaching the half reward in May. The occurrence of coronavirus has contributed to the slow increase in the difficulty of mining. ”
Due to the current situation, the miners are forced to operate on older facilities. The good news for them is that the current price of Bitcoin keeps their mining still profitable. Aries Wang, Co-founder and CEO of Bibox Crypto exchange, said:
“While most mining farms remain open during the Chinese New Year, there have been cases where the Chinese authorities have erupted in several mining operations due to the outbreak of epidemia.”
PandaMiner, a producer and operator of mining farms, also commented on the situation.
“The slow growth of mining is a good report for existing miners. Mining is the same like race in arming. The slower growth of mining difficulty means that these miners are likely receiving returns from their investments in mining”
Infrastructure has also slowed down at the site of the largest incidence of coronavirus, resulting in insufficient import of new equipment to remote areas where bitcoin mining farms are powered by hydropower. Until the situation in China is resolved, we can expect the mining farms to slow down for several weeks.