The ongoing global shortage of chips used in bitcoin mining platform manufacturing is now causing production disruptions. According to a report, these disruptions are causing a shortage of drilling rigs in the market and subsequent price increases. The report already suggests that the prices of new mining rigs have doubled, while second-hand machines saw their prices increase by more than 50% in the past year.
Chipmakers who Shun Bitcoin Rig Makers
Fueled by bitcoin’s rising value, the demand for mining platforms has risen as miners want to maximize returns. However, like the report explains that chip makers are only making things worse, as they now prioritize supplying other industries. According to the report, chipmakers such as Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co are reportedly shying away from creators of bitcoin mining rigs.
Citing Alex Ao, vice president of Innosilicon, the report says chipmakers are choosing to serve “industries such as consumer electronics” because their demand is “perceived to be more stable.” In addition to the production of consumer electronics, the chips are also used in the production of cars, laptops and mobile phones, among other things.
Meanwhile, as the report explains, the ongoing shortages could potentially reconfigure the bitcoin mining landscape. In fact, the report cites Wayne Zhao, the COO at Tokeninsight, as suggesting this is already happening. While many studies, including the latest Messari report which reaffirmed China’s dominance in bitcoin mining, Zhao says this has changed.
China loses the Hash Rate Battle
According to Zhao, while “bitcoin mining in China used to make up as much as 80% of the world total, it now accounts for about 50%.” The COO explains:
China used to have low electricity costs as a major advantage, but now that bitcoin’s price is on the rise, that’s gone.
Lei Tong, the director of financial services at Babel Finance, also supports Zhao’s claim that Chinese miners are losing ground. According to Tong’s assessment, “all major miners are scouring the market for oil rigs and are willing to pay high prices for second-hand machines.” But as he notes, it’s “buying volumes from North America (which have been) huge, (and) depressing supply in China.”
As Danny Scott, CEO of CoinCorner, explains in response to written questions from News.bitcoin.com, the bitcoin mining hash rate, which recently reached an all-time high (ATH), makes miners highly unlikely to leave China. Still, he adds:
So it doesn’t look like they will be eliminated, quite the contrary. Even if miners were to leave China, this could potentially be beneficial as they could all move to other new locations, further decentralizing mining around the world. “
So it remains to be seen whether the rising bitcoin price and rig shortages could eventually cause China to lose its dominant position.
Do you agree that China’s position as the largest bitcoin mining center is under threat? You can share your thoughts in the comments below.
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