Last month, Bitcoin’s price cratered because the coronavirus caused Chinese authorities to shut the country down, effectively making it impossible for miners to get to work. The sell-off wasn’t just about panic, though. Some companies ditched their bitcoins to keep the lights on and pay bills. Eventually, as the new cases of the virus tapered off, courtesy of China’s somewhat draconian methods, and bitcoin mining operations resumed, bitcoin’s price rebounded to where it now sits. It’s hasn’t reached its old resistance point at just over CAD$10K, but it’s decently close.

Now that China’s time dealing with the virus is nearly finished, it’s time for the rest of the world. Now 65% of the world’s production of Bitcoin mining is done in China, which means that we won’t see a dip like we saw last month, but there are some companies that are going to suffer, and Riot Blockchain (RIOT.Q) is one of them.

Riot is experiencing some of the same problems that Chinese bitcoin miners faced during their time under lockdown. They’re having issues with their supply chain, including factory shutdowns and border closures which mean that they haven’t been able to get the equipment they need for their business. That’s going to be an ongoing issue until this solution is resolved.

But there are some solutions the company can deal with immediately.

In order to curtail some of its staffing and electricity issues, the company inked a colocation deal with Coinmint, which operates one of the largest digital currency data centers in North America to try and get a handle on its expenses, which will be doubly impacted by both the halving next month and the coronavirus today.

Recently, we reported on Riot’s acquisition of S17 antminer machines, which were once destined to find a home in their facility in Oklahoma City. Now they’re going to be relocated to Coinmint’s facilities in Massena, New York, where they will benefit from lower energy costs. The S17’s will be in the best possible position to take advantage of the low-cost, environmentally friends electricity after the halving.

Here’s the blurb on Coinmint:

“Coinmint operates a digital currency data center in a former Alcoa Aluminum smelter in Massena, New York. At 435MW of transformer capacity at its Massena complex, the facility’s capacity is three times larger than any other known operating digital currency data center. The facility has been operational since May 2018. Given the abundance of hydroelectric and wind generation in the area, the experience of its management team in wholesale electricity markets, and the large capacity, Coinmint has a material electrical economic advantage.”

Two weeks prior to the deal with Coinmint, Riot submitted its 10-K report to the Securities and Exchange Commission (SEC) discussing what its operation is facing because of the virus, such as Riot’s ability to mine affected by plenty of factors, two of which are Bitcoin mining being curtailed by isolation and self-quarantine of the workers. This choice mitigates the risk associated with the lockdown by giving the company the ability to reduce their workforce to a token few required to maintain the ASIC rigs, because of the ease of access and use of Coinmint’s facilities.

The best part about colocation rental agreements is that the Coinmint provides the space, the electricity, and all troubleshooting and maintenance of machines. In short they outsourced the problem of everyday operations to a third party as much as they could, so they don’t have to pay anyone to go in and tend to the ASIC rigs.

One problem down.

—Joseph Morton

Written By:

Joseph Morton

Joseph is a Vancouver-based author and journalist with both a communications degree and journalism diploma (and a few novels) under his belt. His joie de vivre is to spin difficult technical topics into more human-centric narratives. Buy him a coffee and he'll talk your ear off for hours about privacy issues, blockchain, cryptocurrency and martial arts. Don't talk to him if you're either a tomato, a bully, or if you're not a fan of either 1984 or Tender is the Night. No. You can still talk to him. Just be prepared to be told why you're wrong.

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Bitcoin
Cryptocurrency
Finance
antminer S17
bitcoin mining
China
colocation
colocation centers
Coronavirus
COVID-19
cryptocurrency
cryptocurrency mining
Riot Blockchain
RIOT.Q
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