The current global chip shortage is suppressing the production of Bitcoin mining machines in China. This has a result sent computer equipment prices soaring as the cryptocurrency surge drives demand.
Bitcoin miners consolidating the market to benefit from current high prices
Unfortunately, the scramble has priced out smaller bitcoin miners and accelerated consolidation in the industry which could benefit deep-pocketed miners outside China. Bitcoin users and traders watch BTC mining closely because the amount of BTC mines and distributed into the market impacts supply and BTC price. At the end of last week, BTC was trading at 32% from the record highs it reached two weeks ago but it is still 700% up from March 2020, lows of $3,850.
Alex Ao, Innosilicon’s VP said that there is a shortage of chips to support mining rigs production. It is important to note that BTC miners use powerful and specifically designed computer equipment or rigs in the verification of BTC transactions in a process that creates newly minted bitcoins. Ao said that Samsung Electronics and Taiwan Semiconductor Manufacturing Co which are the top mining rigs chip producers are prioritizing supplies to other sectors such as consumer electronics where chip demand seems to be more stable.
The chip shortage globally has affected production in various sectors including laptops, mobile phones, and automobiles. It is important to note that the profitability of mining depends on BTC’s price, rig efficiency, the computing power required to mine BTC, and the cost of electricity for powering the rig.
Demand for rigs surging
Crypto asset manager and Miner GMR Co-founder Gordon Chen said that there is a surge in demand for rigs due to the soaring BTC prices. He explained that just like when gold prices increase there is a need for more shovels and that is the case with BTC.
Babel Finance, Financial services managing director, Lei Tong said that major BTC miners are currently looking for rigs and are ready to pay high prices even for second-hand machines. Most importantly purchase volumes have been high from North America this suppressing supply in China.