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The Coronavirus is beginning to negatively affect global industries; this is especially true in electronics manufacturing. Factories in China have been closed for the Lunar New Year and were expected to open Monday, but could face struggles due to the disease.
The current manufacturing output has already seen disruptions due to labor struggles and virus fears. If this should continue, the disruption could have impacts that reach all the way into the end of 2020.
The impacts of long-distant production are the result of a process known as ‘new product introduction.’ Companies continue manufacturing hardware that is currently for sale, while at the same time creating product supply chain structures for new releases.
This structure allows companies to release products in consecutive seasons without supply chain interruption. However, with Coronavirus scares coming more and more into focus, manufacturing could disrupt both present and future product releases.
The impact onand other proof of work (PoW) blockchain companies could seriously impact the supply if mining hardware. Most miners upgrade frequently as old machines give out. A substantial supply chain disruption in GPUs and ASIC miners would likely hinder mining capabilities.
Such a problem would create a dramatically lower hash rate, and would likely increase transaction fees for most users, as well as slow block confirmation times. All of these problems would result in decreased network effectiveness.
What’s more, as network effectiveness decreases, adoption will generally slow as well, leaving the market in a place of weakness. This, in turn, could cause significant price changes.
This news, coupled with the awareness that the upcoming Bitcoin halving will reduce miner rewards and could cause miners to need to liquidate BTC — a process called capitulation. This would also increase the supply of BTC on the market, and thereby reduce the price.
Overall, the disruption in electronics manufacturing remains unknown. Nevertheless, the potential remains for serious impact in the Bitcoin network.
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