Global chip shortage hit block reward mining sector in China: report

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The global chip shortage is disrupting production across a worldwide array of products, including automobiles, consumer electronics, and, yes, even blockchain mining. Semiconductors are the backbone of electronics, powering everything from iPhones to Toyota cars.

The Chinese digital currency mining sector faces a critical shortage of computer chips that threatens to hamstring the mining hardware distribution chain. This crunch comes just as the industry is experiencing all times high in profitability caused by the booming price speculation market basking in the renewed interest from financial institutions and mainstream celebrities. 

This severe scarcity of crucial components could hurt the ASIC hardware manufacturing industry and risk becoming a recurring crisis for those already facing massively long delays in delivering new hardware. Even companies like Bitmain and MicroBT are among major manufactures at risk of missing out on the demand uplift as assembly lines slow.

“There are not enough chips to support the production of mining rigs,” Alex Ao, vice president of Innosilicon, told news media service Reuters.

According to Ao, the blockchain sector is finding itself the odd man out as leading chip makers Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics prioritize supplies to traditional sectors they view having chip demand as more stable. The fallout is sending prices of second-hand machines and computer equipment soaring. 

A sales manager at Jiangsu Haifanxin Technology, who identified himself by his surname Li, was quoted by Reuters saying the prices on the second-hand mining gear market jumped 50% to 60% over the past year, while prices of new equipment more than doubled. This is leaving some smaller mining operations in danger of being priced out of the market.

Already, other industries dependent on semiconductors are beginning to feel the effects of the continued shortage. In January, electronics makers, including Panasonic Corp and Yamaha Corp, warned they face some chip shortfalls that are slowing the production of audio equipment and video cameras. 

Most recently, Ford ordered a month-long production pause at one of its plants in Germany, a sign that a global shortage of computer chips is putting car companies under increasing pressure.

TSMC has said easing the shortage is its “top priority.” CNN reported that C. C. Wei, CEO at TSMC, told an investor conference: “We are working closely with our automotive customers to resolve the capacity support issues.”

See also: TAAL’s Jerry Chan presentation at CoinGeek Live, The Shift from Bitcoin “Miners” to “Transaction Processors”