Cryptocurrency

Pandemic coronavirus hits the industry of ASIC Bitcoin


Key facts:

In the production of ASIC, Ebang and Canaan had logistical problems at the beginning of 2020.

Bitmain and MicroBT have had problems with the production and delivery of the equipment.

The pandemic coronavirus has also a beating to the industry of equipment manufacturing ASIC for the network of Bitcoin. So reports the last report of BitMEX, where companies such as Ebang and Canaan have confirmed a decrease in the sale of mining equipment due to the quarantine.

Canaan —recognized in the ecosystem by Avalon, the first ASIC of the story— stated that in the first quarter of 2020 sales of ASIC declined significantly. The company noted that the quarantine by the crisis of COVID-19 negatively impacts your business, generate logistical problems in their supply chains.

The manufacturer pointed out that for the end of the month of may, generated 9.8 million of dollars in profits. Although this represented an increase of 44.6% in its profits, after having declared a net loss of more than $ 140 million for the year 2019 turned out to be a much lower performance of the forecast for the beginning of the current year.

In the report of BitMEX, the company explained:

Since February of this year, we all understand that the outbreak of COVID-19 we have been negatively impacted in China, especially on the side of logistics. Between February and march, we see some increases in price of BTC, but still it persists the outbreak of COVID-19, which is impacting strongly during this period, so we still see that our prices fall.

Canaan.

For its part, the firm Ebang also made similar statements to the end of this quarter, then that tells me that they were struggling with the decline in sales of mining equipment product of the pandemic. “The recent global outbreak of coronavirus-COVID-19 has caused major disruptions in our business,” points in the document of BitMEX. Because of this, expect that the crisis affects both materially and financially to the company.

The policy Ebang is also concerned about how the crisis of coronaviruses will continue to affect the price of Bitcoin. A bearish trend in the market of this criptomoneda, combined with the reduction of reward occurred at the beginning of may, could generate even more losses in this industry.

Bitmain, the company leader of this market, next to its two larger competitors, Innosilicon and MicroBT, also suffered the ravages of the quarantine in China. The companies had to extend their vacation after the first outbreak of the infection, and remained inactive and without the ability to deliver new batches of ASIC for an extended period of time.

This inactivity generated voltage in the ecosystem of mining Bitcoin, because to that time the miners began to prepare for the halving of Bitcoin that would happen in may. And, to do this, they thought to acquire mining equipment of last generation, which had recently been presented by Bitmain and MicroBT.

With more and more countries are lifting the quarantine and employees rejoining to their work activities, the picture seems to improve for the second quarter of 2020. The directive of Canaan noted that the size of the orders in the last few weeks has increased, thanks to that have already begun to consolidate customers and large key.

Also, it is hoped that, motivated by the reward reduction per block, each time more miners upgraded to ASIC for the next generation. Which, according to the report of BitMEX, may have a prolonged lifespan and you get to work for several years in the network of Bitcoin. If so, the manufacturing industry of mining equipment for Bitcoin could recover from this financial downturn.

About the author

Belinda Carey

Belinda Carey

A finance girl by education, Belinda has been drawn to cryptocurrencies ever since Bitcoin first emerged in the 2009. Nearly a decade later, Belinda is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies.

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