Seeking to increase efficiency in crypto currencies' mining causes chips' shortages
Chips Shortage May Be Exacerbated by Mining Giant Bitmain Order
By Nicholas McGregor
7 May 2021, 16:10 GMT+0000
Updated by Ana Alexandre
7 May 2021, 15:36 GMT+0000
Bitmain order to TSMC puts pressure on chip-making industry.
Order comes in the wake of BTC and Ethereal record price highs.
The use of the 5mn process could improve Bitmain’s efficiency.
Bitmain is looking to increase its efficiency and speed when it comes to crypto mining, which is likely due to the recent bullish narrative of bitcoin (BTC) and ethereum (ETH).
TMSC will start the manufacturing of the chips later this year and expecting to finish early in 2022. It is unknown how much of TSMC’s supply has been bought by Bitmain, but TSMC was predicted to up their production of chips from 55,000 to 60,000 wafer starts per month to 110,000 to 120,000.
Chips shortageThe chips shortage began in January 2021, when the global demand of semiconductors massively outweighed the supply. The chip shortage affects a host of industries from children’s toys, technologies, to the motor industry.
McKinsey lead on semiconductors Ondrej Burkacky said that the chip shortage is a universal issue and might lead to some products being unable to be created. “At some point, consumers will be affected by the chip crisis,” he said and added:
“The high noon season for consumer electronics are Q3 and Q4, and there might be shortages of several products during this time.”
At the moment Apple remains the largest consumer of the chips produced by TSMC, as the software giant uses the chips to make iPhone 12, iPad Air, and iPad Pros.
Global need for the chipsDespite efforts from chip manufacturers to keep up with demand, the global need for the chips is too great. Chip sales reached $40 billion in January of 2021, which is an increase of 13.2% from January of 2020.
The surge in demand is likely a ramification of the covid-19 pandemic. The chips are used in the making of technologies from laptops to televisions, and with many people working from home or keep themselves entertained, the need for these devices sky-rocketed.
Meanwhile, a new report on the crypto mining industry has indicated that the market could grow by $2.8 billion between now and 2024. The report also stated that mining is likely to increase as a result of a growing number of mining pools, product launches, and crypto-dedicated hardware.
In another note:
When Elon Musk said that Tesla would no longer be accepting Bitcoin for payment, ostensibly for environmental reasons, he didn’t just cause the price of Bitcoin to tumble. Basically the entire cryptocurrency market went into a rapid nosedive. Of course, the market is always volatile. And there’s a high degree of correlation among coins, but still the reaction across the space was swift and clear.
On Odd Lots we’ve been talking a lot about the semiconductor shortage, but one topic we’ve yet to cover is the intersection of semiconductors and cryptocurrency mining. However it’s becoming pretty clear that you can’t fully separate the two stories. Bitcoin uses specific chips for mining, which are only used for mining Bitcoin. However others, like Ethereum, can be mined with chips that might otherwise be used as graphics cards. In fact, this is a huge source of angst in the gamer community: People are frustrated that they can’t easily get graphics chips from companies like Nvidia due to demand from crypto miners.
And there’s more. According to some reports, the price of hard drives has soared in China, because they’re used to mine the new cryptocurrency called Chia, which already has a fully diluted market cap of over $20 billion according to OnChainFX.
Of course, a one-day price move isn’t going to move the needle that much. But the surge in coins over the last year has definitely led to a boom in demand for mining them, which is definitely a part of the semiconductor story and at the margin makes the market tighter. A downcycle would free up some marginal capacity. Thanks Elon! |
