According to the Reuters report, a global chip shortage is choking the production of machines used to “mine” bitcoin, a sector dominated by China, sending prices of the computer equipment soaring as a surge in the cryptocurrency drives demand. The scramble is pricing out smaller miners and accelerating an industry consolidation that could see deep-pocketed players, many outside China, profit from the bitcoin bull run. Bitcoin’s price briefly dropped to below the $30,000 mark earlier today.
“There are not enough chips to support the production of mining rigs.”
Bitcoin mining is closely watched by traders and users of the world’s largest cryptocurrency, as the amount of bitcoin they make and sell into the market affects its supply and price. Trading around $32,000 on Friday, bitcoin is down 20% from the record highs it struck two weeks ago but still up some 700% from its March low of $3,850. “There are not enough chips to support the production of mining rigs,” said Alex Ao, vice president of Innosilicon, a chip designer and major provider of mining equipment.
The global chip shortage is disrupting production across a global array of products.
Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, the main producers of specially designed chips used in mining rigs, would also now prioritize supplies to sectors such as consumer electronics, whose chip demand is seen as more stable, Ao said. The global chip shortage is disrupting production across a global array of products, including automobiles, laptops, and mobile phones. Mining’s profitability depends on bitcoin’s price, the cost of the electricity used to power the rig, the rig’s efficiency, and how much computing power is needed to mine a bitcoin. Demand for rigs has boomed as bitcoin prices soared, said Gordon Chen, co-founder of the cryptocurrency asset manager and miner GMR.