The bull run of Bitcoin has caused a large-scale expansion of the mining business of this and other cryptocurrencies. The demand for ASIC equipment puts major manufacturers such as Bitmain, MicroBT, Canaan Creative or Ebang in trouble. These companies have exhausted their stocks and the equipment whose manufacture is scheduled for the end of 2021.
Among the main players in this demand for mining equipment are some North American giants. The popular “arms race” between Riot Blockchain, Core Scientific and other companies, has broken all the limits of the imagined thing. Tens of thousands of computers are owned by these firms, with multi-million dollar contracts.
The hidden face of this boom in the cryptocurrency mining business is insufficient chip production. It is noteworthy that the teams Application Specific Integrated Circuit (ASIC), are assembled with various types of 14- and 8-nanometer chips, which are produced by a handful of companies. These chips, at the same time, are necessary for various technological sectors such as smartphones, vehicles, computers, among others.
Bitcoin Mining Expansion Causes Some Delays
The fact that various technology sectors are compromising their development due to the expansion of Bitcoin mining is worthy of study. According Financial times, some smartphone manufacturers have been forced to postpone the launch of their latest models.
But putting all the responsibility on mining might seem unfair. In that sense, the impact of the Covid-19 pandemic must be counted, which left great losses to the semiconductor chip business. Another factor of great weight was the low temperature in Texas, the home state of some of the main chip manufacturing plants. Another related tragedy was the fire at the Japanese plant Renesas Electronics Corp.
Thus, according to studies published in some media, around 1.3 million vehicles could not be manufactured in the last quarter. The recovery of tech sectors from the blows of the pandemic now has a new hurdle in the expansion of Bitcoin mining.
In other words, it is safe to say that even without the huge shadow of digital mining, the shortage of chips would be wreaking havoc. «Cryptocurrency miner demand comes at a time when the chip industry faces simultaneous crises”Says CW Chung of Nomura.
Miners in trouble
But if the mining of Bitcoin and other cryptocurrencies is a threat to some tech sectors, this could work against it. In other words, the reaction of technology companies to protect themselves from the voracious appetite of the mining market could affect the latter.
A clear example of this situation is the decision of the graphics card manufacturer NVIDIA to harm mining. Some digital currencies, such as Ether, are mined with these cards, which are originally manufactured for computing tasks such as design or games. The crisis caused the manufacturer to program the cards so that their performance decreased considerably, in some cases up to 50% when it detected use in mining.
The world’s two largest chipmakers, Samsung and TSMC, on the other hand, are the main suppliers of semi-drivers for ASICs. At the same time, they supply chips to companies like Intel and Apple, which produce more profits than the makers of Bitcoin mining equipment. Despite this, chip production capacity is largely dominated by mining, which hurts other sectors.
Little hope for a short-term solution
Chip shortage problems will become more acute as the expansion of Bitcoin mining becomes more noticeable. The great powers such as China or the United States are playing desperate cards to find a solution that is not seen on the horizon.
China, for example, announced that it would eliminate taxes for domestic companies engaged in the manufacture of semiconductor chips. On the other hand, Joseph Biden, president of the United States, held a meeting with manufacturers to evaluate a solution to the shortage of these technological products.
For many analysts, the fact that the two most important technological superpowers are moving in the same direction is not a guarantee of a solution. On the contrary, it could reflect despair because the shortage of semiconductors can mean a stagnation of technological advance in key areas for development.
Meanwhile, Bitcoin and cryptocurrencies continue to become popular and the expansion of mining shows no signs of abating. New model machines are available only to large companies and their costs in the resale market substantially exceed their true value.
The market for second-hand Bitcoin mining equipment has boomed. However, it is a matter of time before the used miners disappear.