CoinShares, a Jersey-based asset management firm with offices in London and New York that provides advice and other services for investors, released a statement on the state of Bitcoin mining during the global uncertainty caused by the coronavirus, ahead of a planned, more thorough June 2020 mining report.
In it, CoinShares’ research director Christopher Bendiksen wrote that the current talk of a possible mining “death spiral” due to coronavirus-based lockdowns makes for dramatic reading, but is not at all based in reality.
“‘Mining death spirals’ do not actually happen in real life,” Bendiksen wrote in the statement. “They are highly theoretical edge cases without any historical real-world precedent … Mining is here to stay.”
Confidence in the mining space and in bitcoin generally, despite economic uncertainty around the world, is high at the firm.
“Bitcoin is arguably the only financial asset that can operate remotely — nobody needs to go to work to make bitcoin work,” Danny Masters, executive chairman of CoinShares, wrote in a supplementary statement sent to Bitcoin Magazine. “Nobody needs to fill an ATM machine. While things look bleak for everything, I can’t think of a better asset to buy than bitcoin.”Difficulty, Block Frequency and Hashrate
The cost of Bitcoin mining is largely a function of the difficulty — a dynamic metric determined by the protocol itself that can adjust both up and down to keep block times at 10 minutes on average.
Further Reading: What Is Bitcoin Mining?
The difficulty has reset downwards many times — sometimes dramatically as the result of a pullback in price, as in November and December of 2018 — but the network has never ground to a complete halt or even come anywhere close to doing so.
“There is no price level that could cause Bitcoin’s emission rate to increase,” reads Benedickson’s statement. “When the dust settles on the current financial crisis, the Bitcoin monetary s...