Bitcoin Price Records ATH While Miners Are Running Out of Electricity and Machines in China
Bitcoin price hitting an all-time high of more than $20,000 over the past few days has drawn much attention to bitcoin mining – the activity that the world’s largest cryptocurrency is minted. Generally, bitcoin mining difficulty will increase as price surges. While the mining difficulty has been less volatile except for the increase of 8% on November 19. The small increase indicates that not many miners are flocking to the network as is expected despite the wild price rally.
What’s the reason behind it?
Shortage of mining machines as electronic components in short supply
In an average year, mining hardware manufacturers have rolled out new powerful machines. While besides Bitmain’s Antminer S19 series, no delivery of large numbers of other mining machines has yet been seen due to the shortage of electronic components caused by the COVID-19 outbreak.
Some mining machine makers in China have been using SMIC’s chip production capacity, which has been affected because of the U.S. sanctions. While Samsung and TSMC’s orders have been full and they may have less production capacity left for these mining machine manufacturers.
Shortage of electricity in China
Comparing to the shortage of electronic components, electricity in short supply is more influential to bitcoin mining activities. Unfortunately, there is a lack of electricity in some parts of the country this winter, which may make the power supply much tighter.
Due to the shortage of electricity supply as a result of coal price kept rising since November impacted by the trade friction between China and Australia, provinces in South China have implemented emergency power rationing measures. Under such circumstances, power-hungry bitcoin mining activities are the most heavily affected.
In addition to the trade frictions between China and Australia, it is said that due to the extremely cold weather in Russia this year, Russia has cut off the electricity transmission to China, and the regions that use Russian electricity are concentrated in south China, which will only exacerbate pressure on the power supply in China.