The bitcoin mining arena is being heavily impacted by the coronavirus. Among the biggest firms being hit is the Nasdaq-listed Riot Blockchain, which recently submitted a report explaining that the global pandemic is taking a massive toll on its operations.
Riot Blockchain Is the Latest Casualty
In the report, the mining firm explains two major factors under the headline “general risk” that it feels are particularly dangerous to its operations. For one thing, many workers have been forced to stay at home or self-quarantine as the coronavirus continues its spread throughout the globe.
In addition, bitcoin mining is not considered a “necessary for human life” enterprise. Thus, many miners have simply shut down completely to avoid spending money on electricity to extract new coins.
The problem here is that Riot Blockchain works to supply these miners with the equipment they’ll need to keep things going. If nobody is running their blockchain mining firms, that means they don’t need equipment, and if they don’t need supplies, Riot isn’t making any sales. Thus, revenue is low, and the company may face an imminent (and indefinite) shutdown itself.
This has been the situation for many mining-based businesses including Digital Farms in California, which announced last week that it was ceasing all operations until further notice. The drop in the bitcoin price has taken a nasty toll on many of the industry’s top mining companies, who claim that so long as bitcoin remains below the $8,000 mark, it’s not worth mining, and the process costs far more than it can produce.
In the report, Riot Blockchain explains:
If we are unable to effectively service our miners, our ability to mine bitcoin will be adversely affected as miners go offline.
Miners are also set to face the upcoming bitcoin halving, which will occur in mid-May. The event will cut the amount of rewards crypto miners can garner in half, meaning they’re bound to earn a lot less when it comes to extracting new coins. Miners earn digital rewards for every new bitcoin block they produce, but these rewards are set to be lowered significantly.
The Halving Won’t Make Things Easier
The problem, however, is that thanks to the recent price drops, they’re already experiencing lowered rewards, and with the upcoming halving, bitcoin miners are likely to experience drops in revenue like they never could have anticipated. The situation puts the future of crypto mining on a very wobbly scale.
Riot Blockchain is primarily headquartered in Oklahoma City, Oklahoma, and runs a large operation within the area’s borders. Riot provides as many as 4,000 individual Bitmain miners, which were purchased during the final month of 2019 for more than $6 million. These were designed to replace Riot’s old S9 models, of which the company possessed as many as 8,000 models.