Chinese Crypto and Blockchain Firms Grapple With Coronavirus Outbreak
Chinese cryptocurrency exchanges and other blockchain companies are coping with a new reality as the coronavirus outbreak continues to disrupt their daily operations.
While crypto trading, customer service and marketing remain largely intact, the outbreak has taken its toll on technical upgrades, product development, logistics and business travel, according to a dozen executives in China interviewed by CoinDesk.
Following the outbreak, the Chinese government extended its Lunar New Year vacation by one week to Feb.10. Weeks later, a few major Chinese cities remain locked down, and many companies have asked their employees to work from home – including blockchain businesses.
“We encourage our employees to work remotely after the vacation as there are so many people from every part of China coming back to work,” said Aurora Wong, vice president at ZB Group. “The coronavirus is not a regional epidemic, it has been spread across the country and even to other countries.”
The outbreak “has caused psychological stress on people,” Wong said. “While many cities are not technically in lockdown, it is definitely not encouraged to come out for our own health and the whole society to get the epidemic under control.”
Founded in China in 2013, Switzerland-based ZB Group claims its crypto exchange now serves over 10 million users, with $3 billion in average daily trading volume. It has operations across the world including China, Singapore, South Korea and the U.S.
According to Wong, the outbreak is likely to slow the exchange’s technical upgrade to a new version. The upgrade could include front-end mobile apps for users as well as the back-end trading engine.
Before the outbreak, “we were very efficient and fast on upgrading our platform because people across different departments such as the engineering team, product development and marketing could meet and work together to carry out plans,” Wong said.
However, the outbreak has had only a limited impact on daily operations of ZB’s trading platform since the firm keeps a schedule to rotate its staff to maintain the exchange, according to Wong.
Estonia-based Bibox crypto exchange, which also originated from China, said it has a contingency plan to tackle the operational challenges due to the coronavirus outbreak.
“We might relocate our core engineering team to other Asian countries such as one of our Asian headquarters in Singapore or Vietnam where there are much fewer infected cases,” said Aries Wang, co-founder of Bibox.
According to Wang, Bibox’s trading, marketing and customer service have not been affected much, but new product development and networking events with potential investors have been disrupted to a degree.
“We originally planned a meeting for Chinese crypto funds and private equity firms in London to pave the way for our potential initial public offering on the London Stock Exchange in March,” Wang said. “The meeting and IPO would probably be delayed to a later date.”
Further, when Bibox lists new tokens, the product development team needs to work very closely with the engineering team, creating custom services for clients and upgrading its own exchange platform. But this requires face-to-face meetings, which are for now rare.
OKEx, one of the top three crypto exchanges by trading volume, said it’s staying vigilant now that it has resumed business after the vacation.
“We suggested our employees stay where they already are, avoid crowds as much as possible and reduce business trips,” Jay Hao, the CEO of OKEx, said of its headquarters in Hong Kong.
“Our offices have been completely disinfected, and we have also prepared protective equipment such as surgical masks, liquid soap and alcohol-based sanitizer for all of our employees,” Hao said.
The firm has upgraded its IT systems, such as phone and video conference software, to streamline the process of working from home and ensure normal operations throughout its global offices, according to Hao.
Working (and conferencing) remotely
Outside of trading venues, other blockchain startups in the region say they’ve been significantly affected by the outbreak.
B Labs, a blockchain incubation center co-founded by Canaan Creative, OKEx and Yangtze Delta Region Institute of Tsinghua University, has decided to reduce rents for some of the startups that use the space and open a platform for them to apply for subsidies.
Conflux, a Beijing-based blockchain firm, is also coping with the outbreak’s ramifications.
“Coronavirus has affected us in a way that we had to replan many offline events within the Asia Pacific region,” Christian Oertal, chief marketing officer at Conflux, said. “We had to pivot into organizing and participating in online events.”
“As for office work, everyone at Conflux is working remotely from home. The health of everyone in the company should not be put into any risky situation in current times,” he added.
Another part of the blockchain industry which has been significantly affected by the outbreak is mining, the business of running expensive computers that race to solve math problems in order to record transactions and secure crypto networks.
A spate of miner manufacturers, including Bitmian, MicroBT and Canaan, have expected some of their deliveries to be delayed due to slow logistics caused by the outbreak. Some of the mining farms are short of workers to maintain machines, while a few mining farms have been shut down by local governments as part of the measures to contain the epidemic.
The growth rate of mining difficulty, an indicator of the level of competition among bitcoin miners, has been slowing since the coronavirus outbreak, signaling that miners have paused upgrading to newer, more powerful machines.
In the most recent two-week cycle, from Feb. 11-25, this gauge declined for the first time since early December.