The coronavirus has caused several businesses to shut down as of late, but the price of bitcoin is also contributing heavily to economic downplay. Several mining firms and blockchain-based enterprises don’t see a point in keeping their doors open so long as the asset’s price suffers, and some companies – like mining venture Digital Farms in California – have decided to shut down “indefinitely.”
Digital Farms Will Close Down for a While
This isn’t the first time we’ve seen the mining industry hit by hard conditions in the crypto industry. Remember 2018? It was arguably the roughest year for bitcoin and its crypto counterparts. Despite several coins reaching their all-time highs just months before, many saw their values disintegrate and crash the moment 2018 was rung in and the world said adios to 2017.
Bitcoin, for example, was trading at almost $20,000 during the previous Christmas holiday. The next Thanksgiving, the currency has lost more than 70 percent of its value and dropped into the mid-$3,000 range. Ethereum had fallen from its $1,400 high to about $100, while bitcoin cash fell to a few hundred dollars after trading beyond $3,000.
It was an ugly sight, and many crypto mining giants such as China’s Bitmain saw massive declines in the sales of mining equipment during this time, forcing it to lay off half its staff. It appears several mining firms and related businesses didn’t see a point in continuing their operations; bitcoin and crypto were no longer profitable.
Now, the scenario is playing out again. Digital Farms is just one of the companies that has decided to call it quits until further notice. So long as BTC is below $8,000, miners just aren’t making the same money.
A few days ago, the company’s parent enterprise DPW Holdings issued a statement explaining:
Digital Farms cryptocurrency mining operations have been suspended indefinitely, primarily due to the sharp decline in the market price for bitcoin… Due to the unprecedented market conditions domestically and internationally, and the effect COVID-19 has had and will continue to have on the company’s operations and financial performance, the extent of which is not currently known, the company is temporarily suspending guidance for 2020.
Last Year Seemed to Be Good
This marks a huge change for the company, which seemed to be doing ok last year. The enterprise purchased a 617,000 square foot facility to set up all its mining rigs. It claimed to have access to approximately 28 megawatts of power, and that its infrastructure would be powerful enough to support as many as 300 megawatts in the future.
However, the company had been around since February of 2018, when things really started to go bad for bitcoin. By that time, Digital Farms had borrowed over $20 million and spent thousands to purchase crypto mining equipment, yet the venture made less than $2 million in profit by the time 2019 rang in.