Categories: Bitcoin Business

Pan-African Insurer Old Mutual Will Not Insure Mining Rigs

Click here to view original web page at www.coindesk.com

Old Mutual, a legacy, pan-African insurance company, announced it will not insure equipment used for cryptocurrency mining, according to a statement released June 10. The company cites the expense, risk, and speculative nature of the industry.

Africa contributes less than 10 percent of the total bitcoin hash rate, according to Bitcoin Magazine. Many advocates for the fledgling industry think strict regulations, costly electricity prices, and mining rig price tags are preventing it from developing — a problem that will only get worse if miners cannot take out protection on their gear.

Old Mutual is not the first to ban coverage for mining equipment or price premiums outside the reach of many hobbyists. Cryptocurrencies are often considered an asset class with a different risk profile than other forms of capital, and may carry premiums that reflect that risk.

Following extensive research, as well as an in-depth review of claims from clients that have incurred losses to equipment used for cryptocurrency mining, Old Mutual said it has begun advising its branches not to insure any businesses involved with the industry.

“We have chosen not to provide cover for this type of risk as it is quite tricky to conduct a proper risk analysis of an unregulated fledgling industry that is already on the radar of financial authorities due to the unfortunate association with money laundering and cyber crime,” said Old Mutual insurance expert Christelle Colman.

The insurer notes crypto mining operations typically utilize high-cost computers, servers and other equipment modified to run heftier application-specific integrated circuit devices that can overload the computer’s central processing units or graphic processing units. Furthermore, running a system continually, which the company alleges is industry practice, introduces risks of overheating and other malfunctions.

“Even doing a comprehensive inventory of the insured equipment is difficult because the value of the highly modified computer equipment is typically inflated and almost impossible to verify as it is usually imported from obscure suppliers in the Far East,” said Colman.

Old Mutual is also concerned about the volatile, unregulated nature of the industry, which is often associated with speculative trading companies — prone to going bust — or worse, cyber crime.

Although insurers have come down on protecting mining equipment, CoinBase recently announced it has taken out $255 million for coins held in hot wallets on behalf of their customers — signaling willingness by insurance companies to enter other crypto sectors.

cinerama

Illuminati, Mason, Anonymous I'll never tell. I can tell you this, global power is shifting and those who have the new intelligence are working to acquire this new force. You matter naught except to yourself, therefore prepare for the least expected and make your place in the new world order.

Disqus Comments Loading...
Share
Published by
cinerama

Recent Posts

Bitcoin Sheds $10,000 Support Again Ahead of Bakkt Launch

Ahead of the launch of Bakkt’s Bitcoin (BTC) futures, bears have continued to assert control over the cryptocurrency market. Ouch.As… Read More

56 mins ago

Bitcoin ‘Messiah’ Goes To War With The ‘Deep State’

One of bitcoin and crypto's oldest proponents, the founder and former chief executive of U.S. online retailer Overstock, Patrick Byrne,… Read More

56 mins ago

The Specs Behind Bitcoin’s Lightning Pass Their First ‘Formal’ Security Test

A pair of researchers have released the results of a formal verification of bitcoin’s lightning network.Lightning is new(ish), experimental, and… Read More

57 mins ago

Deja Vu 2000 Or Flashback 2007? (Part 2)

“The experience in Japan, Europe, or even the US, is that once you get into a near-zero interest-rate regime, it’s… Read More

7 hours ago

Blockchain Industry to Generate $16 Billion Revenue by 2024

Often considered as a nascent technology, blockchain was introduced about a decade ago. Although the technology has not been around… Read More

7 hours ago

Kate Winslet takes action against Bitcoin scammers who used her image

Kate Winslet has spoken out after her image was used to advertise a Bitcoin scam Movie star Kate Winslet is… Read More

7 hours ago

This website uses cookies. We use these cookies to collect data about your interaction with our website for the purpose of continuously improving your experience with our site. For more information we encourage you to read our privacy policy.

Read More