This week the price of Bitcoin (BTC) surged more than fifteen%, reaching a high at $7,200 before pulling back into the $6,800 range. Despite the recovery, Bitcoin still has a way to go in order to attain the $8,000 level seen earlier the coronavirus-triggered selloff on March 12.

Cryptocurrency market performance

Cryptocurrency market place performance. Source: Coin360

The driblet had several consequences on the Bitcoin network. Having reached the $3,800 price range, the accentuated driblet forced some Bitcoin miners to throw in the towel and shut downwards their operations due to mining becoming unprofitable.

Every bit miners accept hosting and electricity fees to keep up with, oftentimes relying on the curt-term yields of their equipment, the cost led to the biggest difficulty drib since 2022. Still, it seems like the coronavirus and the steep drop in the value of Bitcoin may have affected some regions more than others.

Chinese miners become nighttime

Equally was recently reported by the Chinese publication Securities Daily, more than than xl established mining operations have been forced to shut downwards as a large number of Antminer S9s, an older generation of Bitmain'due south popular Antminer products, have become unprofitable. An manufacture insider told the publication that "roughly two.3 million Antminer S9s have been shut down since March x," according to data from F2pool.

This drop in the price of BTC seems to accept affected Chinese miners the nearly due to the corporeality of S9s and sometime-generation equipment that have get unprofitable to proceed using. Electricity prices for miners in China range from $0.03 to $0.05 per kilowatt-hour. Even for miners with electricity at median rates of $0.04 per kWh, miners need Bitcoin to be at $five,136 to be profitable.

Matt D'Souza, the CEO of Blockware Solutions, told Cointelegraph:

"The drib was several old generation rigs going unprofitable. If yous monitor the pools. Many of the Asian pools lost hash, not the American pools. That signals it were machines in the East that shut down, non Due north America. It was sometime gen equipment out East. Information technology was ultimately the price of Bitcoin dropping and machines becoming unprofitable and forced to close off."

Impact of coronavirus on Cathay-based miners

Not only has coronavirus affected miners indirectly through its effect on the price of Bitcoin — and just about every other asset class — the pandemic has also afflicted the area more than broadly and made machines harder to come by as supply chains take been disrupted. D'Souza explained:

"I think COVID has influenced hash rate driblet considering it has disrupted global supply chains. So miners are not getting rigs quick plenty. The difficulty adjustment was much greater because next-gen rigs have been delayed due to COVID-19."

The pandemic has also had a considerable upshot on the secondhand market for mining equipment, which has ever been a well-known subset of the mining industry. Wu Tong, the deputy director of the Blockchain Commission within China's Ministry building of Commerce, has already observed this first hand. He recently told Securities Daily:

"Under the influence of the epidemic, the difficulty of maintaining, renewing and continuing production of mining machines has further increased, and the 12.04 price plunge has put many mining machines on auction. The tide of mining machine selling has already occurred, and the average selling price of each mining car is xxx%–l% lower than before the Spring Festival."

Why miners may motility abroad from China

Cathay has been the market leader when it comes to mining for a long fourth dimension, with studies showing it collectively controls a majority of the Bitcoin hash rate. Mainland china's authorization is owed mainly to the country'southward low electricity prices and leading manufacturers, such as Bitmain and Ebang.

These atmospheric condition not only allow more advanced Bitcoin mining operations to access new generation equipment quickly and cheaply merely besides for smaller operations to make use of old equipment for longer and acquire it at lower prices.

However, as Bitcoin continues to mature and gain interest among investors, other countries may have a different set of characteristics that make it more feasible for mining.

Pros and cons of mining in the East

Countries like Venezuela that have even cheaper electricity and other subsidized free energy sources oftentimes end up receiving old mining equipment similar the aforementioned Antminer S9. But the price is not the only factor, every bit net speeds besides give countries like the Usa an edge.

Higher purchasing power and the power to heighten capital may allow new miners in Western countries to access new-generation machines and to stay ahead of the bend. This is the example with Blockware Mining, which has kept its 180 petahash per 2nd mining operation upward and going despite college electricity prices in the U.S.

Moreover, the Chinese regime has non shied away from its dislike of cryptocurrency and Bitcoin mining. The country has a rail record of neat downwardly extensively on exchanges and many illegal mining operations. The U.S., on the other manus, has been alee of the bend when it comes to regulating the cryptocurrency industry, which may prove to be a decisive factor in the future.

Information technology has certainly proven to be so for companies like Bitmain and Ebang, which have submitted list applications to the Hong Kong Stock Substitution merely have not heard back.

A pivotal moment for mining

Overall, it's possible that we may run across a shift in the mining manufacture, especially with moments like the halving and the ongoing pandemic.

The hypothetical decentralization of the industry would be welcome, as many have expressed concerns when information technology comes to the centralization of Bitcoin mining. Merely for at present, Mainland china continues to take the lead.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading motility involves take a chance. You should conduct your own research when making a decision.