Published by Shirley Rodriguez on January 13, 2020

How Is Semiconductor Manufacturing Influenced By Cryptocurrency?

If there is an industry that stands to gain the most from the emergence of cryptocurrency, it is undoubtedly the semiconductor manufacturers. The industry experts think that both bitcoin, as well as, the digital currency provides increasing opportunity in the face of rapid acceptance around the world. That is primarily because of the usage of the chips in mining virtual currencies, and the key players are focusing on consuming less electricity and allow faster processing of mining. The industry also sees the entry of more big players to get their share.

Advanced Algorithms

Costly mining machines are used to mine digital coins like Bitcoin or Ethereum or Litecoin. These costly computers perform with advanced algorithms, as well as, mathematical equations. This is required to crosscheck transactions apart from retaining a running ledger, reported. If reports are true, then a mining rig could cost anywhere between $3,000 and $10,000. Aside from this, there is also a considerable amount of energy involved a minimum cost of $3,000 even in low-cost utility markets. Therefore, the semiconductor industry is forced to engage in a competition to make the most powerful, as well as, the energy efficient mining rigs.

Companies like Nvidia and AMD have benefited immensely from the growing mining of cryptocurrencies last year. This was also evident when their shares spiked last year partly because of the increase in Ethereum price. That is mainly because of increased demand from Ethereum miners that has created some graphics cards shortage though on a temporary basis. Additional sales from the crypto segment are predicted to be $875 million. This is despite the regulators tightening their noose around the digital coins sector as investors interest is growing at a rapid pace.

Bitcoin continues to be an equipment-intensive one though its prices have tumbled in the current year from last year. The increasing demand has obviously made cryptocurrency mining rig supplier, Canaan, to raise a maximum of $2 billion through an IPO. In 2017, the company could sell over 300,000 mining rigs.

Aside from this, Taiwan Semiconductor Manufacturing disclosed in April about the ambiguity in the cryptocurrency mining for offering weak guidance for the remainder period of the current year. That clearly suggested the influence of the digital coin sector on the semiconductor industry. Manufacturers indicated that mining chips represented about 4.5 percent of their total revenue in the third quarter and added $900 million last year.

Big Players Entry

It appears that big players like Samsung have understood the importance of cryptocurrency in the future digital payments market. This was also quite evident when the Korean firm indicated that it has started producing ASIC chips that are used to mine digital coins. A spokesperson told the media, “Samsung’s foundry business is currently engaged in the manufacturing of cryptocurrency mining chips. However, we are unable to disclose further details regarding our customers.”

Though Intel also disclosed its intention to enter the market, there was a delay in the manufacturing of 10 nm units until next year. Moor Insights & Strategy founder and president, Patrick Moorhead, do not see any scope for prices to fall in respect of ASIC chips …

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