Global Supply Chain Crisis: When Physical Battlenet Suffocates the Virtual Flow

There is a global supply chain crisis going on now. And it may bring down the cryptocurrency like Bitcoin. It is very interesting that Bitcoin will be actually affected by the physical limitation as the cryptocurrency suppose to run virtually and unlimited. 

Downside of PoW

We may realize that the Proof of Work consensus algorithm heavily depends on miners. By using hash rate computing power, one can mine Bitcoin with efforts similar to gold mining operations. The downside is that PoW is constantly needed computer power to update their hash rate power through machine ASIC machines. Every year, the machine will update similar to computer chips to increase its speed of calculation. It is a technology racing game to outpace your competitors with the most updated and fast computing power to mine more Bitcoin.

Global supply chain

The global network to supply cheap products to countries that consume lots of and it heavily depends on the shipping business. Countries with cheaper materials and labor costs will make products and serve the rest of the world such as China.

The crisis

It is a consumerism crisis that countries heavily depend on one output of a single source and there are no backup plans. It is induced by the COVID-19 global pandemic and forces many countries to shut down for preventing the virus from spreading. 

Why the crisis impact Bitcoin

ASIC machines largely manufactured outside of the developed countries and there is a shortage of computer chip supplies will slow the growth of the crypto industry. Since the recent surge in the crypto market, there are more demands on mining machines and hash rate power. But the physical limitation and global supply chain crisis will drag the growth down and prevent new machines from arriving at mining companies.

Multiple levels of economical failing

The global supply chain will further drag down every aspect of the economy and make the current situation worse. With an already low supply of labor and works availability, the economy will be harder to meet the already printed money which induced more inflation and drag longer term of inflation to stay in. 

PoS may avoid the cost

With Proof of Stake, the mining operations can spread between the owners of coins and it did not rely on the energy into the hash power that apart from its operation away to the global supply chain. 

In conclusion

The cryptocurrencies will need to evolve apart from physical constraints. Even there are parts that link into the traditional economy that may drag its leg from becoming a better future of use.