The ongoing global shortage of chips used in the manufacture of Bitcoin mining rigs is now causing production disruptions. According to a report, these disruptions lead to a shortage of drilling rigs in the market and subsequent price increases. The report already suggests that prices for new mining equipment have doubled, while used machinery prices have increased by more than 50% over the past year.
Chip makers avoid Bitcoin rig makers
Due to the rising Bitcoin value, the demand for mining equipment has increased as the miners try to maximize the return. However, as the report explains, chipmakers are worsening the situation as they now prioritize delivery to other sectors. According to the report, chip makers such as Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co are reportedly avoiding Bitcoin mining rigs manufacturers.
Quoting Alex Ao, vice president of Innosilicon, the report says chipmakers are choosing to service “sectors like consumer electronics” because their demand is “seen as more stable.” In addition to their use in the manufacture of consumer electronics, the chips are also used in the manufacture of automobiles, laptops and cell phones, among other things.
As the report explains, the ongoing bottlenecks could potentially reconfigure the Bitcoin mining landscape. In fact, the report quotes Wayne Zhao, the COO of Tokeninsight, indicating that this is already happening. While many studies, including the recent Messari report, which confirmed China’s dominance in bitcoin mining, Zhao says that has changed.
China loses the hash rate battle
According to Zhao, “Bitcoin mining in China used to make up 80% of the world’s total, today it is around 50%.” The COO explains:
China used to have low electricity costs as a major benefit, but as the price of Bitcoin is now rising, that’s over.
Lei Tong, director of financial services at Babel Finance, supports Zhao’s claim that Chinese miners are losing ground. According to Tong, almost all major miners search the market for oil rigs and are willing to pay high prices for used equipment. But as he notes, it is “the volume of purchases from North America that has been huge (and is depressing supply in China)”.
As CoinCorner CEO Danny Scott explains in response to written questions from News.bitcoin.com, given the Bitcoin mining hash rate that recently hit an all-time high (ATH), miners are very unlikely to leave China. Still, he adds:
“So it doesn’t look like everyone is turning off, on the contrary. Even if miners left China, it could potentially be beneficial as they could all move to other new locations and further decentralize mining around the world. “
It therefore remains to be seen whether the rising Bitcoin price and rig bottlenecks can ultimately lead to China losing its dominant position.
Do you agree that China’s position as the number one bitcoin mining hub is under threat? You can share your views in the comments section below.
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