Coronavirus Hits Bitcoin Mining

A key measure of competition among bitcoin miners has stagnated recently with coronavirus outbreak disrupting the economic activity in China.
Mining difficulty – a measure of how hard it is to validate blocks and win bitcoin – adjusted on Feb. 11 to a level 0.52 percent higher than 14 days earlier, marking a significant drop from the growth rates of 4.67 and 7.08 percent, recorded on Jan. 28 and 14, respectively.
The virus outbreak and the mandatory quarantine imposed by Chinese authorities may have forced miners to delay upgrading equipment, leading to a slowdown in the pace of difficulty increases. Additionally, major mining equipment makers may have delayed production.
Mining difficulty is adjusted to the network hash rate or computing power every 2016 blocks. When more miners join the race to earn newly created bitcoin, the difficulty rises; when miners drop out, the measure eases.
Before the virus outbreak, miners were planning to phase out older mining machines and buying new and more powerful models with any aim to make up for the drop in the profitability post the May 2020 reward halving.
“The outbreak may have delayed the transition and contributed to the slow growth in mining difficulty,” said Jason Wu, the co-founder and CEO of crypto lending startup DeFiner.
Also, some miners have been affected in a more direct way. For instance, one mining farm owned by mining pool BTC.top’s CEO Zhuoer Jiang was reportedly shut down by the local government in an unnamed area in China.
With reward halving three months away, the mining difficulty may rise sharply if the coronavirus peaks in Wuhan in mid-late February 2020, as anticipated by the London School of Hygiene and Tropical Medicine.