Why are Bitcoin Mining ASIC prices rising and where will they go next?

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The prices of ASICs, the computer components at the heart of Bitcoin mining, have jumped this year. But why? And where will they go next?

There could be a number of factors contributing to the rise in the price of bitcoin mining ASICs, the components that are at the heart of the specialized machines used to secure the Bitcoin network in exchange for BTC rewards, including supply shortages. , congestion of transport in the world, a growing demand from Chinese miners who move. outside of China and a growing demand and interest in bitcoin.

Even COVID-19 was apparently a factor, as Whatsminer factories in Thailand and Malaysia were almost forced to close in August 2021 due to the spread of the virus.

And as the prices of ASICs rise, the most popular mining rigs are as rare as ever. Bitmains Antminer S19j Pro, for example, is currently listed at $ 9,300 on its website. All other Antminer products are listed as sold out.

Bitmain and other manufacturers are depleted until mid-2022 and growing North American miners are driving up demand and price for available ASICs in the market, Luxor Technologies CFO Ethan Vera said. at Bitcoin Magazine.

Unless a mining company has established a pre-order or has a fixed contract with an ASIC supplier, there is often a wait until at least spring 2022 for new equipment.

But to determine exactly how this ASIC market is shaping the present and future of bitcoin mining, Bitcoin Magazine spoke to players on the manufacturing and sales side of the equation. And there were two things everyone seemed to agree on:

ASIC prices will continue to track the price of bitcoin, and as it has increased in recent weeks, so will platform price tags. A global chip shortage is the biggest manufacturing bottleneck driving ASIC prices up.

ASIC miner prices always follow the price of bitcoin, Blockstream CSO Samson Mow said. The higher the price of bitcoin, the higher the price of miners. [But] the other factor is the shortage of chips, which limits the supply. The supply of Bitcoin miners may never catch up with demand.

Bitcoin price rise, ASIC price rise

Compass Minings Zack Voell recently looked at the rapid rise in mining equipment prices and estimated that there was a 25% increase in the third quarter of 2021, a trend he attributes to the rising price of bitcoin.

Seeing prices in different ASIC categories increase by 20-40% this quarter is not shocking, given the rebound in bitcoin prices over the same period, Voell wrote in a recent edition of the newsletter. Compass Minings.

Source when the chips are low

Computer chips are by far the most expensive component of an ASIC platform and orders are being held up due to a global shortage of many industrial products including microprocessors, telephones, automobiles and other electronic devices. It is especially the wafers which are rare small silicon discs that hold a chip together to build integrated circuits.

Samsung and Taiwan Semiconductor Manufacturing Company (TSCM), two of the biggest makers of these chips, recently raised prices to meet growing demand, said Vincent Zhang, MicroBT’s sales director, in a recent podcast from Compass Mining.

ASICs used for bitcoin mining account for less than 1% of Samsung and TSCM’s sales, and chip buyers like Apple and automakers are ahead, Zhang said. There is no doubt, Vincent Vuong of Compass Mining added, on the same podcast, that bitcoin miners are getting second-level processing from Samsung and TSCM.

What’s next for the ASIC market?

While it looks like the rise in the value of bitcoin will continue to drive ASIC prices up, other factors also seem poised to influence the market.

In response to the latest chapter in China’s Bitcoin ban, including an executive order banning the sale of mining equipment inside the country, Chinese e-commerce giant Alibaba has announced that it will not sell plates -mining forms or related accessories.

From October 15, 2021, Alibaba will close two sections of its website: Blockchain Miner Accessories and Blockchain Miners.

And Luxors director of research and content Colin Harper has said he expects Bitmain to likely close its remaining manufacturing plants in China.

Think ASICs are expensive now? Harper asked. Next year looks like a time to hold my beer for even higher prices as the makers move [out of China].

But Mow said China’s continued shutdown is not a major factor in the price of ASICs.

The continued crackdown in China (including the latest decree banning the sale of mining equipment in China) is great for bitcoin decentralization but doesn’t really affect the price of ASICs, he said. The ASIC market has moved away from the Chinese market and is much more affected by the current global shortage of chips, which were by no means manufactured or sold in China.

Zhang is confident that ASIC sales and prices will improve in the fourth quarter of 2021 and 2022, mainly due to improved chip availability.

Vera predicts a short-term drop in ASIC prices as many miners, especially those emigrating from China, give up settling elsewhere.

We could see short-term drops in ASIC prices as miners get impatient with infrastructure delays and deals end up failing, Vera said. Across North America, there have been dozens of planned mining operations that have not been delivered this quarter, with many more to come. Major infrastructure setbacks will likely create a period of ASIC liquidation.

Meanwhile, Voell pointed out the proven rule regarding ASIC prices in his own prediction for the future of his newsletter, the BTC price will ultimately lead to the price of the mining platform. sees future prices following the price of bitcoins:

Obviously, whatever direction the bitcoin price takes, ASIC prices will follow, he wrote. Cryptocurrency traders and investors have a very disparate outlook for the market heading into the last quarter of 2021. A bull market would be nice to document gains on machine values ​​for miners. A bearish result could be a nice gift for miners looking to get more machines.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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