At present, the global lock down situation is reaping rewards for large scale, more efficient bitcoin miners and makes smaller operations less profitable. This also becomes dependent on geolocation, cost of electricity, currency devaluation, how old mining equipment are, legal restrictions and access to latest mining hardware.
The global market meltdown has indirectly benefited Russia's bitcoin miners, even as the cryptocurrency prices has tumbled along with other assets.
Russian Ruble has lost value very rapidly, dropping from 60 rubles to the dollar to around 76 in a few weeks. Apart from the coronavirus pandemic weighing on all global markets, the ruble has also taken a hit from the price war with Saudi Arabia, which slashed oil prices, Russia’s main export, to its lowest level in decades.
As of today, as bitcoin is trading around $9,000 , the price would be $9,000 times 76 rubles, not 60 rubles as it would have been few weeks ago. Thus, a drop in revenue is mitigated for miners, even at far below prices for bitcoin than the current value.
With the ruble plunging, the average price of electricity, a primary costs for miners, has also dropped. In Siberia, Russia’s most prominent region for mining, the average price for power available to local mining farms fell from 5 cents per megawatt/hour to 4.
These factors would give Russian miners an edge, even after the most awaiting bitcoin halving as well.
Bitcoin mining is deemed as a “essential service” in Canada, under the federal government's COVID-19 strategy. This gives miners in Canada a significant advantage against there competitors, to a certain degree. Also the CAD has deprecated to a great extent which aids them in a similar manner to miners in Russia.
The Iranian government has been cracking down on cryptocurrency mining operations, pending legislation for a formal mining licenses. A key reason was miners were mainly using subsidized electricity, for an example: supplied for mosques and some cases were reported where they were building farms in mosques.
In Iran, miners saw there operations stalled since miners were not able to lay their hands on new, more efficient mining equipment. This is partly because they have no direct access to China’s hardware supply chains. Most mining equipment currently in use are smuggled in and miners had to pay a high price obtaining them. To add insult to injury, if they are caught mining the will have to face a jail sentence or pay hefty fines.
Due to drop in bitcoin prices and upcoming halving of bitcoin mining rewards, some mining operators in the USA, are shutting down, at least as a temporarily measure until post halving prices make mining more lucrative again.
On the other hand, many miners have debt loads to worry about and are speculating indeed. But relying heavily on bitcoin price to increase after post halving, to stay operationally profitable, is not the most reliable business model.
Earlier this year, bitcoin miner manufacturers in China reported delays in shipment. Although some shipments have already resumed and on there way, others remain backlogged. To be profitable in post halving era, it is crucial to obtain updated mining equipment, which are more efficient than current models. Also many Chinese miners are selling there less productive mining equipment to counterparts as they themselves have a higher probability of accessing the latest equipment.
Another key factor to consider is, keeping technical analysis aside and taking a pure fundamental view, at present the Federal Reserve (FED), European Central Bank (ECB), Bank of Japan (BOJ) and other central banks around the globe have flooded the financial market with worthless fiat currencies printed out of thin air. This is with the aim of restarting there respective economies, funding bailouts, provide a universal basic income and to prevent current recession from going into a Deep Depression (Possibly worse that the Great Depression in 1929).
For now the inflation is relatively low since the velocity of money has decreased as a result of low consumer spending due to lockdown and the coronavirus crisis hindering global supply chains. Also current low oil prices keeps operational and production costs low.
But as the economy restarts, as the inflation picks up, there is a great possibility that some of that money could find there way to the Crypto Currency space.
Well, a very sweet dream to indulge your self once in a while. It may or may not become true !
I am no financial adviser, nor any information in this article is financial advice. It is for information purpose only. Any investment decision you make is at your own risk.
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