Processor manufacturing bottleneck hits mining industry hard

Processor manufacturing bottleneck hits mining industry hard

Mining hardware prices skyrocket, causing significant shifts in the market.

A global shortage of microchips is having far-reaching consequences for the mining industry, Reuters reports. The shortage is particularly noticeable as Bitcoin Profit crypto mining is currently more lucrative than ever due to Bitcoin’s record run.

The combination of reduced supply in chip manufacturing and increased demand from miners is pushing the price of mining hardware to astronomical heights. The stocks of Bitmain, one of the leading producers in this field, are already sold out until August 2021. Mining rigs that are currently still available on the market are trading correspondingly high.

While the Antminer S19 model was still priced at 1,897 US dollars in November 2020, at the time of going to press it is now being sold for 2,767 US dollars, as Bitmain’s website shows. This corresponds to a premium of a whopping 45%.

Alex Ao, vice-president of chip manufacturer Innosilicon, explains to Reuters that there are simply not enough processors to cover the production of mining hardware at the moment.

Most of the available hardware is bought by mining companies in North America

In the previous year, American companies such as Riot Blockchain, Bitfarms and Marathon had already made large-scale purchases from Bitmain and MicroBT and thus launched a major attack on the global mining market.

That the intention behind this is to gain market share is clear from the fact that these purchases came despite the Bitcoin halving, which literally halved the block reward of the market-leading cryptocurrency and made mining less profitable, at least for a while.

This attack is aimed first and foremost at Chinese miners, who still control the global market. But the current shortage and the buyouts from the US are putting them under increasing pressure, which is why their market dominance has now fallen from 80% to 50%.

The current situation is also a severe blow for many small miners, because the high prices for mining hardware make the investment costs for private miners and small mining companies almost unsustainable. As a result, they are increasingly being squeezed out of the market, putting the once „decentralised“ industry more and more in the hands of a few.

Other industries are also currently suffering from the shortage in processor production. For example, besides American and Japanese carmakers, German carmakers are also having to wrestle with supply bottlenecks.