Chip shortage hampering Chinese crypto mining sector

China’s crypto miners are concerned about chip shortage
  • Global chip shortage is affecting the crypto mining sector’s production
  • The shortage of chips is also affecting other electronic manufacturers 
  • Following the shortage, the chip manufacturers are prioritizing other sectors more than the crypto mining industry

Global chip shortage is choking the production of crypto mining equipment. The manufacturing industry is dominated by China, driving the cost of computers as demand for crypto rises. The crisis is also throwing out smaller miners and accelerating a sector consolidation that could attract more deep-pocketed players, mostly out of China gaining from Bitcoin’s bull run. However, the traders, along with the leading crypto-token users, observe the mining sector very closely. For this reason, the amount of crypto tokens the miners make and sell in the cryptosphere affects its supply and price.

How is the global chip shortage disrupting the mining sector?

The miners of Bitcoin use heavily influential, specially designed mining equipment or rigs to verify the transactions. The verification process is also called minting, which produces newly minted tokens. In the current scenario where there is a lack of chips, which affects mining equipment production. According to Alex Ao, the vice president of Innosilicon, there is a global chip shortage. For this reason, the chip manufacturers are unable to support the production of mining equipment.

The shortage is affecting every tech sector

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Not only the mining sector is affected by the global chip shortage. It is observed that the electronics sector manufacturing laptops and mobile phones are all affected. Following the aforementioned fact, the chip producers are not prioritizing the crypto mining sector. Some primary producers of specially designed chips to produce mining equipment, like Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, have also claimed to prioritize supplies to sectors like consumer electronics. The demand for such chips is stable. 

Bitcoin’s price is a significant factor affecting mining expense

According to Gordon Chen, the co-founder of GMR, the demand for equipment has surged with the demand of the token designed by Satoshi Nakamoto. It is known that the profitability of crypto mining operations depends on the price of the flagship crypto token. For example, before China used to provide cheap electricity, and after the recent price rally of Bitcoin, the power cost increased. For this reason, the miners started to migrate from the country too. However, the electricity cost and the price also affect the efficiency of equipment and how much computing power is required to mint the token.

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Ahtesham Anis
Ahtesham Anis is a Computer Science undergrad student currently based out of India. Coming from the business background and his keen interest in Cryptocurrency and Blockchain technology is what Ahtesham brings to the table. He is always an eager learner when it comes to exploring the new technologies and topics in the crypto world.

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