Does Crypto's demand for decline affect mining chip sales?
The cryptocurrency industry it is not the only market affected by the downward trends in the market. Even companies in the IT sector are in difficulty, as shown by the decrease in demand for mining crypto equipment.
This is evident from Taiwan Semiconductor Manufacturing Company (TSMC), projections of sales growth of the world's largest chipmaker manufacturers for this year. The company growth forecasts were reduced to only 6.5%, down from the previously estimated sales growth of between 7% and 9%.
According to Zhang Jian, founder of F1 / Fcoin,
"Chips orders are falling, which is a clear reflection of the continuing bear market within the cryptocurrency space.It is no secret that mining cryptocurrency has accelerated progress and sales of computing power, but this pace slowed significantly in the second quarter and third quarter ".
The reality is that investor sentiments are not really favorable at this time. While Crypto has enjoyed tremendous growth last year, leading to record sales growth for companies like AMD, this year has not been so great.
In fact, AMD has seen sales decrease compared to the same quarter last year. Bitcoin saw a huge price drop from over $ 18,000 at the end of January to around $ 6500 in October, with a value loss of around 60%.
This fall in prices has also dragged down other altcoins with the result that their prices are now a fraction of what they once were. The status of Bitcoin and other altcoins has led miners to slow down the purchase of mining equipment.
This is because most can not even break, while some are even losing their miners. Mining equipment they typically tend to fly off the shelves when there is a boom, as was observed last year. AMD, which was driving the package in sales of crypto-extraction ASIC units, saw a significant drop in sales this year.
As a result, TSMC, which produces these chips for them, has also seen a reduced number of sales. AMD prospects for sales of crypto mining chip for the rest of the year it's not great, due to the sustained bearish nature of the market.
This, combined with increasingly complex puzzles and minor rewards for mined bitcoin blocking, saw the miners reevaluate their strategies and postpone the investment into multiple waiting chips. With these chips becoming increasingly expensive, miners can not justify the expense. This is partly why there is a break in the demands of these devices.
Peng Mao-Jung, a manager with the Taiwan Industrial Technology Research Institute, says
"A drop in the demand for cryptocurrency mining equipment has to do with the high purchase cost.The lack of interest in mining equipment also has to do with the implosion of encrypted prices".
However, the lower prices of the crypt, less the demand and the high costs of the mining equipment are not the only ones responsible for the state of the crypto mining sector. There is another possible contributor: the production of a new generation of mining equipment. There is a clear possibility that buyers are waiting for the release of the new chip set running on the 7-nanometer processor, instead of the current 16-nanometer processors.
7-nanometer chips have the added benefit of increased power and reduced power consumption. As a result, miners could wait for it in the hope of further maximizing their profits.
According to Shone Anstey, co-founder of BlockChain Intelligence Group, a Vancouver cryptocurrency monitoring company,
"The indicators are there that the market is slowing down in preparation for this new family of mining chips to get into production.The increased power of these new mining chips could push smaller mining operations to pool resources to scale" .
While the market may be slowing down this year, it is possible that it could rise again next year after the release of key bitcoin updates and key documents, as well as the official entry of institutional investors into the market.
If this happens, most likely, we will see an increase in the sales volume of ASIC miners and other encryption hardware. Consequently, manufacturers of mining encryption hardware will enjoy better sales growth and profit margins.