How Bitcoin’s Price Drop Affects Mining Geography

Although China keeps leading positions in Bitcoin mining, the coronavirus pandemic and the king coin’s price drop are altering the situation in other countries.

Thomas Heller, business director of one of the world’s biggest Bitcoin mining pools, F2Pool, stated that market crashes have made it unprofitable for some Bitcoin (BTC) miners with older machines to operate. Speaking about miners in Asia and Europe, he said:

“We lost 10 percent of our bitcoin hashrate from our clients, for some of our competitors it was closer to 30 percent.”

Mining operations in North America have also suffered. Upstream Data founder Steve Barbour, who operates Bitcoin mines on oil fields in Canada, said fewer companies are investing in experiments with Bitcoin, at least so far.

He said:

“Pretty much every Canadian oil producer is basically telling their staff to do nothing and spend no money, and we’re a service provider for those companies. We were growing, month by month. This month is flat and I’m expecting next month to be down.”

Similarly, the California-based Digital Farms is shutting down until the price of Bitcoin regains traction and mining becomes more profitable.

In the meantime, the coronavirus is dwarfing the hardware supply chain worldwide.

One anonymous Bitcoin miner in Iran stated that he had to stall operations because the new equipment has not been delivered to the country. Major Bitcoin miner producers in China started announcing coronavirus-enforced delays in late January. Although some global shipments have resumed, other supply chains remain backed up.

Additionally, due to forthcoming halving event, some miners are ceasing operations, at least temporarily until prices make their efforts lucrative again.

According to Heller, Chinese miners still account for around 60% of the global hash rate, followed by Russia with 15%-20% and North America with around 15%. It is hard to determine Iran’s hash rate share due to a lack of official statistics.

Russian miners have not been impacted as hard by the coronavirus market decline, partially due to the Russian ruble already being in dire straits.

The Russian mining operator Bitriver said at least one client moved operations from China to Bitriver’s Siberian facilities earlier in March. A second Iranian Bitcoin miner, who had to stop mining operations due to tax conflicts, suggested that many Iranian miners will finally do the same and move to Russia if the regulatory landscape does not change in Iran.

Ironically, the Bitcoin mining industry in Iran is diminishing despite domestic demand from retail users. Sources on the ground in Iran, once home to a burgeoning mining industry, state that the Middle Eastern nation is no longer positive towards crypto entrepreneurs.

An anonymous mining pool manager in Southeast Asia stated that many Iranian miners consider moving their operations to Russia or “other places with cheap power” since the Iranian government is now actively introducing taxes on mining operations.

As well-resourced Chinese companies build new setups prior to the Bitcoin halving in May, some geographies could see an uptrend in hash rate share.

Heller noted:

“Chinese miners are trying to sell large quantities of older S9s [mining machines]. With potential buyers particularly in Russia, the Commonwealth of Independent States region [post-Soviet republics in Eurasia] and the Middle East.”