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October 2, 2022
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China’s Bitcoin miners were hit by global chip shortages

The cost of platforms is increasing as demand for major cryptocurrencies increases, driving out smaller players

The global chip shortage is hampering the production of used machines for mining Bitcoin, a sector dominated by China, driving up the cost of platforms as demand for cryptocurrencies increases.

Smaller Bitcoin miners are being scaled back, which is accelerating industry consolidation because it’s only profitable for big players, many of whom operate outside of China, reports Reuters.

Bitcoin mining is closely watched by traders and users because the amount of cryptocurrencies that miners manufacture and sell on the market affects their supply and price.

Trading at around $ 32,000 on Saturday, Bitcoin fell 20% from its biggest high, close to $ 42,000, two weeks ago, but is still about 700% above its March low of $ 3,850.

“There are not enough chips to support the production of mining platforms,” ​​said Alex Ao, vice president of Innosilicon, a chip designer and a major supplier of mining equipment.

Bitcoin miners use specially designed and increasingly powerful computer equipment – platforms – to verify Bitcoin transactions in a process that creates new BTCs.

Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, the main producers of specially designed chips used in mining platforms, would also prioritize supply to sectors such as consumer electronics, whose chip demand is seen as more stable, Ao said .

The global chip shortage is disrupting the production of a global range of products, including automobiles, laptops and cell phones, the Reuters report said.

Mining profitability depends on the price of Bitcoin, the cost of electricity used to power the platform, the efficiency of the platform and how much computing power is required to extract a Bitcoin.

Source: Asia Times

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