How Semiconductor Manufacturers Can Drive The Next Phase of Cryptomining

Bitcoin and other cryptocurrencies have been going through cycles of boom and bust over the past few years with the most recent run seeing Bitcoin’s price going as high as $19,000. Today, the price hovers around $7,100 which while not as high as $19,000 is still significantly higher than it was only a year ago at $2,000 and less than two years ago at around $200. Both most recent runs on Bitcoin’s price in 2013/2014 and 2017 also drove a significant amount of demand for gaming computer hardware to be able to affordably mine the many different cryptocurrencies. However, as the difficulty of cryptocurrency mining increases as part of the natural progression of their algorithm, there has been increased demand for mining-specific ASICs.

Bitcoin and other cryptocurrency mining ASICs have existed in the past, but they were very low volume and produced very expensively with some companies never delivering their product to consumers. In this world of unknowns, more reliable companies have risen to the challenge and released multiple generations of ASIC miners which are still relatively expensive compared to the price of a gaming GPU. This is partly what drove the GPU shortages in Holiday 2017 and for the first half of 2018. When it comes to ASIC miners, many of them are made up of dozens or even hundreds of very small ASICs designed to mine Bitcoin and other cryptocurrencies as efficiently as possible.

To continue to drive down the cost of these ASIC miners, the cost of the ASICs inside of the miners needs to come down. The way that this happens is by driving down the cost of producing the actual chips themselves, which are manufactured in semiconductor fabs. Different semiconductor fabs have various process nodes that they use to manufacture chips for their customers, usually optimized between a mix of power, performance or price. With the right fab process node at the right semiconductor fab, ASIC miner manufacturers could significantly drive down the price of ASIC mining machines and ultimately the cost of mining for everyone.

If you want a deeper dive into how semiconductor manufacturers are driving the future of cryptocurrency mining, read our research brief (free, sign-up not required).

Note: This blog contains significant contributions from Moor Insights & Strategy analyst Anshel Sag.