The ASIC Mining Hardware Market
Two hardware sales directors explain the nuances and trends of the cryptocurrency ASIC mining market.
The market for cryptocurrency mining hardware is as new as it is complex. It’s further complicated by sharing as many new elements of the cryptocurrency market as it does legacy traits from the computer manufacturing industry. In this livestream, two ASIC sales directors talk through the trends, challenges, and opportunities in the current ASIC market.
This livestream is important for any miners that are curious about the how ASICs are made, why ASIC prices fluctuate, and what ASIC manufacturers, repairers, and distributers deal with on a daily basis.
- Vincent Vuong (Compass Mining): He joined the industry in 2017. He briefly worked at Novoblock before joining the Compass mining sales and procurement team. He is a mechanical engineer by trade. In college, he started hardware procurement through Chinese sources and sold them to American miners. He has sold over 100,000 ASICs.
- Vincent Zhang (Whatsminer / MicroBT): He is a sales director at MicroBT. Before he joined MicroBT in 2018, he worked in the telecom industry for 14 years.
Update on the current state of mining hardware markets? (timestamp)
- There hasn’t been excessive hardware selling despite the bitcoin price decline
- ASIC value goes up faster than it drops.
- Publicly traded companies are purchasing machines from the manufacturer, they are not allowed to use secondary markets.
- North American and European miners signed longer term agreements and made heavy capital investments in 2020.
- Large players purchase miners over a half year before delivery.
- Smaller and medium players will purchase miners currently in stock.
- The price of ASICs may drop in the fall if bitcoin price doesn’t rebound.
How are supply chain issues affecting the ASIC markets? (timestamp)
- ASICs have a higher bare minimum cost now, due to shortages and high demand of certain components (i.e. wafers).
- Costs increases are being passed on to the clients.
- The cost of some ASIC components and ASIC lead times have increased (labor shortages).
- Vincent (MicroBT): we request more parts than needed because some orders are getting cut.
- ASIC chips are the most expensive component
- By Q4 2022 – 2023, the supply situation regarding wafers and ASIC chips should improve.
Opinions on miniature mining devices (e.g., Coinmine) (timestamp)
- Since 2019 miners switched to 3,000 watt power or more. These devices would not serve most miners’ needs.
- The power cost needs to be low for these devices to be viable.
- Vincent (MicroBT): our R&D department is not focused on these devices; we are focused on reducing the operating costs of investors. For example, heat reuse research.
- If the machines are not power efficient, like traditional ASICs, they will not last long.
- Vincent (Compass): Retail miners are not always profit driven, they may want to run miners like these to support the network or heat their homes.
What parts of ASICs are the hardest to source? (timestamp)
- Hash boards and PSUs (power supply units) are hard to source.
- Hash boards can’t be mixed together unless they are produced with the same bin. The model of the miners and bin of the hash boards must be the same.
- Older machines (ex. Antminer s9) are easier to source parts for vs. new machines.
- Many miners stock up on parts and have technicians on site because they don’t machines sitting idle.
The relationship between bitcoin price and ASIC prices (timestamp)
- ASICs are priced based on the ROI of the machines; the ASIC price follows the price of the underlying asset.
- ASICs “print” the underlying asset, making the correlation between bitcoin price and ASIC price 100% correlated.
- The price of the miners is impacted by the bitcoin price and mining difficulty.
Does it make sense for retail miners to buy ASICs? (timestamp)
- Vincent (Compass): yes, but if you don’t have low power rates, it’s best to collocate your hardware.
- Vincent (MicroBT): Profitability can differ depending on the cycle, but the retail miner needs to make sure they have enough funds to cover power bills so that they can hold the bitcoin they mined. In this case, home mining is profitable because the miner can wait until bitcoin prices go up before selling mining rewards.
- Vincent (Compass): If retail decides to mine at home, they can use tax strategies.