After researching the industry, the Pan-Africanist financial group discovered a number of reasons that prompted it to make the decision that will not sit well with crypto miners.
According to a local report, Old Mutual is convinced that the cryptocurrency industry is associated with cybercrime while the equipment used for crypto mining is highly modified and operates on a 24/7 basis, making it susceptible to malfunctions such as overheating.
Old Mutual won’t cover crypto mining equipment anymore
Old Mutual is already advising its branches not to cover crypto mining equipment after the insurer conducted comprehensive industry research and review of claims involving cryptocurrency mining hardware.
Christelle Coleman, an insurance expert at Old Mutual 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.”
Coleman further added that the crypto market is highly volatile and rife with speculators. This makes it difficult for the insurance firm to come up with a proper risk rating structure for the nascent industry.
Old Mutual’s decision not to cover crypto mining equipment comes at a time when crypto startups are focusing on insurance. BitGo is now offering insurance coverage for digital assets under its custody.
African governments have mixed reception of cryptocurrencies. South Africa has taken a relaxed approach to the emerging crypto industry.
South Africa’s central bank has experimented with the technology and is currently exploring the possibility of issuing a Central Bank Digital Currency to be used in parallel with the local legal tender.
Mauritius has positioned itself is a front runner and has created a regulatory sandbox for cryptoassets. This is a progressive stance that may be followed by a more friendly and positive approach to cryptocurrencies.
Nigeria has been slow to accept cryptocurrency even though its residents have sizable bitcoin holdings.
In the future, African countries are expected to be more receptive of cryptocurrencies as they learn more about their benefits.
Crypto mining in Africa
Cryptocurrency mining hasn’t really taken off and there is a long way to go before Africa becomes a major hub. The continent collectively contributes only less than 10 percent of Bitcoin’s hash rate.
The leading crypto mining countries in Africa are Egypt, Ghana, Nigeria, South Africa, and Uganda.
Electricity costs and availability play a major role in Africa’s bitcoin mining activities. South Africa has a very strong economy and electricity is not too expensive, making it an attractive destination for crypto mining in Africa.
Old Mutual’s refusal to cover crypto mining equipment will not likely have a big impact on the sector.