The coronavirus has had terrible effects on the cryptocurrency arena, but nothing has suffered the way crypto mining companies have suffered. The latest venture to fall victim to the stifled COVID-battered economy is Hut 8 Mining Group, a crypto mining firm stationed in Canada.
Hut 8 Is the Latest Company to Get Hit
Recently, the company issued a statement detailing some of the concerns it had regarding how to keep its operations steady. Hut 8 says it’s experiencing heavy delays in the delivery of new equipment from firms such as Bitmain and Micro BT, which back in February, would have been delivered no later than March or April.
However, the coronavirus has put many orders on hold, which means these companies have failed to produce the necessary products in the time allotted. Hut 8 has no idea when it can expect the deliveries to occur, and as a result, it could likely experience a difficult time in keeping its mining schedule going.
CEO Andrew Kiguel explains:
Three or four weeks ago, nobody though these things would be an issue, and the world is grappling right now with different supply chain issues like getting ventilators and masks around the world as opposed to bitcoin mining machines.
The bottom line is that crypto mining is not considered an essential business venture, which means that many firms have either had to shut down completely or lower their production expectations over the next couple of months (or as long as the global lockdown is enforced). Firms such as Riot Blockchain have experienced similar problems in that many of its workers are either performing duties remotely or are self-quarantined.
In addition, they have failed to receive new equipment in due time and cannot provide the products their remaining customers are looking for.
Other companies, such as Digital Farms in California, are reportedly shutting their doors indefinitely and ending all mining operations for the time being until the lockdown is lifted.
Hut 8 says it’s planning to stick around for as long as it can, though present circumstances are making this rather hard. Kiguel says that the upcoming bitcoin halving – scheduled for mid-May of this year – probably won’t make things any easier. Miners have already seen their crypto rewards significantly reduced in recent weeks thanks to falling prices due to lowered economic prospects.
The May-scheduled halving is likely to reduce rewards even further, which could lead to serious problems in the mining sector.
Trying to Plan for the Future
There’s a lot of different scenario planning that we’ve done.
Hut 8 launched its primary operations in 2018 and made serious attempts to boost its hashing power the following year. Ultimately, Hut 8 garnered nearly $60 million in annual income in 2019 – a 66 percent increase over what it earned during the previous 12 months.