With investors and traders worried about the exposure of equity and bond markets to risks related to the coronavirus, more money is being poured into the cryptocurrency markets. At the same time, Bitcoin mining activities slowed down.
A reduction in mining difficulty was recorded, suggesting that miners may be reluctant to upgrade their equipment after observing the results of the coronavirus. Chinese authorities have taken steps to impose quarantines and other restrictions to combat the virus. This has led to equipment delaying production and shipments.
Bitcoin has experienced a surge in price value of 38% this year, shooting from $7,200 at the beginning of January and getting to $10,400 on February 13, before falling back down, below $10,000.
There is strong reason to believe a combination of bitcoin mining activities, the incoming halving, and the coronavirus had a high influence on recent prices.
According to Gavin Smith, CEO of hedge fund, Panxora,
“Bitcoin started rising during the market sell-off triggered by coronavirus. That was just the short-term catalyst – the underlying driver is the bitcoin halving event in May. Previous halving events have seen some of the larger participants hold off on releasing bitcoin into the market in anticipation of a rise into the event.”
Bitcoin adjusts for difficulty every fortnight. As more miners try to earn new Bitcoin, the difficulty rises. As miners reduce on the platform the mining difficulty reduces.
Chinese Bitcoin miners shut down operations due to the coronavirus epidemic. While it is not clear how many miners chose to put a pause on operations, the reduction in supply power has had a significant effect on the wave of events.
Statistics now show that trading volume contributed by Chinese miners has dropped significantly. On Antpool (which previously had the largest volume for a mining pool) dropped to fourth by volume.
According to CNN, there are now 53 confirmed cases of coronavirus in the US. Bitcoin mining has been likened onto a gold rush in the US. Two major mining centres in the US are located in Washington and New York. Hope remains for US to push bitcoin mining activity as coronavirus continues to spread.