Riot Blockchain, a crypto mining firm, recently released its annual 10-K report, which predicts a gloomy future for cryptocurrency mining in the face of COVID-19. The report says the company expects the Coronavirus outbreak to have a huge impact on its mining operations.
Specific Focus on COVID-19
Whenever a company is filing a report with the SEC, they have to include a general risks section. However, their report had two subsections that focused on Coronavirus. The report says that the company expects major disruptions to its operations. Workers going into self-isolation, mandatory quarantines, and other restrictions on their employees that hamper their ability to perform their tasks will cause disruptions.
The report goes on to state that if they are not able to effectively service their mining rigs, their crypto mining ability will be disrupted as some rigs go offline. Besides disruptions to their operations, they pointed out that supply chains might break down. The reason for this is that China, a major source of cryptocurrency mining hardware, has placed certain restrictions on the cross-border movement of shipments. As a result, they might experience delays in receiving the necessary hardware to continue their operations.
The company also pointed out that they have not been classified as an essential business in the states where they operate. Consequently, their office premises might be shut down in the future. The result would be that they would not be able to service their rigs and continue mining Bitcoin. Finally, the report notes that the overall economic downfall could have a huge impact on demand for BTC, which would negatively affect their operations.
They noted that the use of crypto was quite limited in transactions. The increased volatility due to the outbreak could have a huge impact on their investment. For instance, they note that banks may refuse to continue processing funds from the crypto sector.
The Effect of COVID-19 on Cryptocurrency Mining
The Riot Blockchain report highlights a general trend in the crypto mining sector. Many mining firms have expressed concerns about their ability to continue operating in light of the Coronavirus pandemic. In China, various firms had to shut down their operations due to strict measures imposed by the government to control the outbreak.
Besides miners, most of the manufacturers of mining equipment had to shut down since they were based in Guangdong Province, which was badly hit by the virus. However, many factories in China are slowly coming back online as the spread of the virus in the country slows down. However, Riot Blockchain said it was hard to quantify the exact impact of the outbreak on their operations.
Crypto Mining Revenue
As mentioned in a previous report, it was crucial for Bitcoins price to stabilize in mid March when it was pushing $5,000 levels. It was outlined that Bitcoins price was operating below the “break-even” point for many miners. At the time of the writing it was believed that “break-even” BTC price for miners was around $6,851 ( pre-halving ) and $15,062 ( post-halving ). Since then, Bitcoins price has rallied to mid $6,000 levels, almost approaching its believed break-even point ( pre-halving ). It’s quite impressive that Bitcoins price has approached break-even points during market turmoil. China’s medical reporting during Coronavirus has been a nightmare, and many believe the metrics are fabricated. If China can stabilize the virus in the near term, it can only help Bitcoin mining as the digital asset approaches its halving in May.
Some Corners of the Crypto World are Still Doing Well
While there has been a general downturn in the economy and the crypto sector, not every corner of the crypto sector has been adversely affected. One of the areas that are doing well is the stablecoins industry. As price volatility in the crypto sector increases, investors in the sector are increasingly turning to USD-backed stablecoins as a safe haven.
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