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For some mainstream Bitcoin mining equipment manufacturers, a new round of bull market is driving continued business growth. Now the Bitcoin mining market demand has exceeded supply. The batch bookings of these manufacturers’ mining machines have begun to be queued up. It is expected that in It will be difficult to successfully obtain the latest Bitcoin mining rig before May 2021.

Judging from the current market demand for Bitcoin mining machines, institutional demand is accelerating.

According to the information displayed on Bitmain’s official website, the company’s flagship mining machine product AntMiner S19
The Pro, S19, and T19 will have to wait at least half a year for delivery, which means that pre-ordered Bitcoin mining rigs shipped before May 2021 have already sold out.

Similarly, Bitmain’s largest competitor MicroBT also disclosed on its official website that its flagship WhatsMiner M30 series mining machine has also been “sold out”. A spokesperson for the company said in an interview
In an interview with The Block, it was stated that future pre-orders for mining machines have been received from April to May 2021. Currently, the production capacity of only a few months ago is on sale and is basically "out of stock."

There are many reasons for the shortage of Bitcoin mining machine supply. To sum up, there are roughly three main problems:

1. Starting from the third quarter of 2020, the price of Bitcoin has increased significantly;

2. As the price of Bitcoin rises, institutional customers’ demand for Bitcoin mining equipment increases;

3. Bitmain and MicroBT chip suppliers have limited wafer production capacity.

According to MicroBT
A company spokesperson revealed that they are working hard to obtain more chips from Samsung to meet more orders in the future; on the other hand, Bitmain is also actively purchasing chips from Taiwan Semiconductor Manufacturing Company (TSMC). Of course, the distributors owned by these Bitcoin mining machine manufacturers can still provide a small amount of spot inventory to meet previous order needs, although there is a large price premium. For miners, the first consideration when choosing a mining machine is computing power, because the higher the computing power, the faster the mining speed and the higher the income. Basically, the computing power of a mining machine is determined by the performance of the chip. Chips are precision components, and upgrading their computing power requires breaking through technical barriers. It is a long process from research and development to production. These factors also prevent the supply of mining machines from catching up. changes in market demand.

According to relevant quotations posted by some mining machine distributors on WeChat, the order price of Bitmain’s AntMiner S19 Pro spot inventory ranges from US$3,800 to US$4,100.
between US dollars. In early November 2020, the spot stock price of the same model was around US$3,300 per unit. In addition, according to the AntMiner S19 Pro shipped in April this year
Order prices show this model selling for $2,684 at the time.

Generally speaking, after the price of Bitcoin surges, there will be a shortage of supply of Bitcoin mining machines. This phenomenon has actually happened before, such as in June 2019 and 2017.
A similar situation has occurred in every bull market cycle - but this year seems to be different. You will find that the purchasing power of mining machines is more consolidated in 2020, and the increased market demand mainly comes from overseas markets outside China.

Foundry, a subsidiary of Digital Currency Group
It mainly provides Bitcoin mining equipment procurement services, and also provides financing services to mining machine operators in North America. Mike Colyer, CEO of the company, revealed:

“We have a lot of customers looking to purchase over 1,000 Bitcoin mining rigs at once.”

Mike Colyer
He went on to explain that a large number of Bitcoin mining farms have been built in the North American market in recent years, but the products of many wafer semiconductor manufacturers seem to have not kept up, and they have not allocated sufficient chip supply to mining machine manufacturers as they did in the past.

Kevin Dejun Ge is a senior Bitcoin miner who has been mining in China since 2017 and now serves as the director of Miners.Fund, a Bitcoin mining fund company.
Partner, he shared some thoughts on the recent Bitcoin mining machine market:

“In 2020, Chinese mining machine operators’ purchase demand for ASIC mining machines has been significantly reduced. Basically, starting from the third quarter, the production capacity of mining machine manufacturers has been sold to overseas buyers. MicroBT
The production capacity of Bitmain and Bitmain has basically been bought out by large Bitcoin mining operators and funds. In the future, they will either use these mining machines to mine themselves, or they will choose to resell them when prices are high. "

According to the observation of Kevin Dejun Ge, the current single order of institutional mining machine buyers is usually around US$15 million, and each purchase transaction starts with 5,000 mining machines. But Kevin
Dejun Ge analyzed that the increase in the purchasing power of Bitcoin mining machines in overseas markets will not necessarily lead to a decline in China’s computing power. He explained:

"The purchase order only reflects the contract between Party A and Party B, and the final flow of miners mainly depends on market conditions."

The main reason why large institutional buyers place "crazy" orders is that they can enjoy huge discounts in advance and at the same time "bet" that the price of Bitcoin will rise sharply when the mining machines are shipped. This means that even if these buyers After getting the mining machine, you don’t need to use it for mining at all. You can also make a lot of money from the price premium by selling it back to local Chinese miners. This is also in the interest of overseas institutional buyers.

At the same time, for existing Bitcoin mining market participants - especially Chinese retail mining operators, the barriers to entry (or expansion) into the Bitcoin mining market are becoming increasingly high, even making People are intimidated. In addition to the serious shortage of mining machines, the halving of Bitcoin mining rewards in May this year also greatly reduced miners’ profits, and the mining difficulty once reached an all-time high - at the time of writing this article, according to
BTC.com data shows that the mining difficulty of Bitcoin across the entire network is as high as 18.96 T.

The Bitcoin market is very interesting, but it also follows the development rules of the commercial market. How long do you think the shortage of mining machines can last? You might as well share it with Planet Master in the comment column below.