Red Alert: Ripple Effects of Coronavirus on Chinese Electronic Manufacturers and Bitcoin Miners
The scourge of the coronavirus has led to the temporary closure of factories in China with the electronic industry supply chain being hit the hardest forcing an extension in the Lunar year holiday following the outbreak of the virus.
Despite quarantine and several measures being actively employed to halt the spread of the virus in China, the outlook is looking bleak for Chinese manufacturersas the year 2020 continues to evolve, with factories seemingly extending the holiday season due to uncertainty surrounding the spread of the virus.
Factories in China are showing their concern about how the situation of the virus could cause a drastic effect on their company. Andre Neumann-Loreck, founder of On-Tap Consulting, a Silicon Valley firm offering advice to hardware companies and startups building products in Asia said, “Clients are making lots of inquiries on ways to address the epidemic.” The effect of the virus is showing huge strain on companies who build hardware or physical products irrespective of the goods being built in China or reliance on China for components and subassemblies to finish the products.
How the uncertainty might unfold
A risk analyst at Resilience360, Shehrina Kamal is of the opinion that the risk and the effect emanating from China is totally unprecedented and such has never been witnessed before, which occurs due to the supply chain already witnessing a week-long setback to reopening of factories.
Getting new workers is seen as a likely issue to arise which could take a while longer to be resolved even after the outbreak has been put under control due to the fact that the majority of the workers of factories in China often travel from the countryside to factories in urban areas.
Although fully functional companies have emergency measures in place to deal with disruptions in production and with adequate planning they should be able to keep production active though at a slower rate than expected with a delay expected in the design and prototyping process well into the holiday season as stated by Swaminathan.
The effect on cryptocurrency mining
The coronavirus outbreak in China may impose a longer-term impact on the Bitcoin network’s mining activity considering the fact that an estimated 65 percent of its Bitcoin computing power is located there.
While Chinese miner manufacturers see rising demand for new equipment ahead of Bitcoin’s scheduled halving in May, it is estimated that the disease may limit growth in Bitcoin mining power if the situation isn’t resolved in the near future because it is difficult to expand or build new machines, according to Kevin Shao, general manager of Canaan Creative's blockchain arm.
So far, almost every Bitcoin miner maker in China–Bitmain, Canaan, MicroBT, and InnoSilicon – faces delays in production and delivery. Bitmain and Canaan, the world’s top two miner makers by market share, have published notices saying the delay of after-sale services until Feb. 10 due to the outbreak of the disease.
According to crypto research firm Chainalysis, China has the status as a crypto investment hub, as it houses the most crypto exchanges in the Asia-Pacific region, which has 40 percent of the world’s top 50 exchanges.
Jason Wu, the CEO of crypto lender DeFiner, admitted to canceling a dozen meetings with his crypto clients in China after the outbreak. He said, “We planned a 10-city tour to talk with potential clients in China. Nobody wants to attend any crypto-related conferences or any meetings at all because of the virus. We have to rearrange everything.” The coronavirus’ potential disruption of business may have an impact on crypto prices, as professionals such as Wu are concerned.
As the situation lingers, work is expected to start soon as the government, organizations continue the battle to curtail the virus.
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