Old Mutual Insurance, a Pan-African insurance firm, has announced that it won’t be offering insurance cover for cryptocurrency mining tools anymore. The company’s decision was first reported on Monday by tech news platform ITWeb, and per the publication, reasons for this include risk, expenses, and the unregulated nature of the industry.
The agency also expressed concerns over the exposure of cryptocurrencies to fraudulent activities, as well as the fact that a lot of malfunctions could result from modified mining equipment infrastructure.
Speaking on the decision, Christelle Colman, one of the company’s insurance experts, said, “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 cybercrime.”
The insurer also pointed out that crypto mining activities usually involve the use of expensive computers, servers, and other tools designed to run application-specific integrated circuit devices that could easily overload a computers graphics processing unit or central processors.
In addition to that, the continuous running of a crypto mining system could easily introduce the risk of malfunctions such as overheating. Old Mutual is one of the largest Pan-African insurance agencies, and the move seems to be a bit practical costly. While there is a lot of potential for the growth of the cryptocurrency industry within the continent, a lot of infrastructural issues have plagued it up till now.
For proper reference, a recent report from Bitcoin Magazine revealed that the continent in total generates less than 10 percent of the total Bitcoin hash rate.
Africa’s Power Conundrum
The issue of electricity in Africa is one that has been prevalent for as long as we all can remember. Sadly, while there has been a massive technological revolution that has engulfed the region within the past decade, this lingering power problem has continued to stifle progress considerably.
The major issues with the region revolve around access and cost implication. Take Liberia for example. The West African country is home to about 4 million citizens, and even with such a considerably small population (by today’s standards, anyway), the country has just 126 megawatts of electricity installed.
For proper reference, this number pales in comparison to the average capacity of a single power plant in the United States, and there are 8,000 of those.
If that wasn’t bad enough, Liberian citizens pay about three times more than an average American pays for electricity access.
While many have advocated for alternate sources of electricity generation across Africa, things haven’t particularly gotten better. Electricity has always been one of the major considerations when crypto mining is in view, and as far as Africa goes, electricity instability could prove to be catastrophic.
Mining equipment requires a constant and uninterrupted power supply to work optimally and mine digital assets. Power outages, current surges, and other anomalies would undoubtedly jeopardize their functionality, resulting in more damages than should be allowed. As it would seem, Old Mutual Insurance isn’t looking to pick up such a burden just yet.