Bitcoin Miner Manufacturers in China See Huge Surge in Demand
The massive price rally the entire crypto market has seen since the beginning of the year has affected much more than just profits. According to reports from the Global Times, manufacturers of Bitcoin mining hardware have benefited hugely from increased prices. As Bitcoin’s price passed its ATH of $50,000, mining profitability skyrocketed, even for slightly older hardware.
With China being the epicenter of mining hardware manufacturing, suppliers based in the country reported an unprecedented rise in demand for their products. Most manufacturers reported working with a tight production schedules as orders valued at hundreds of millions of dollars coming in.
Canaan Creative, the second-largest bitcoin mining hardware manufacturer in China, has seen a huge jump in orders since last year. According to sources from the company, most of the orders were received from North America and Central Asia—the majority of the clients are companies listed overseas, multinational companies, and fund-backed enterprises. Shares in the company have risen over 318% in 2021, data from Shanghai Securities News has shown. The company signed an advance order for 6,400 mining machines with a Canadian mining company called Hive Blockchain. Core Scientific, a major U.S. mining firm, ordered 6,000 miners from Canaan, sources from the company told the Global Times earlier this week.
The company’s own reports revealed that more than 100,000 units have been pre-sold in the North American market alone, with the company receiving advanced payments of nearly $200 million.
To deal with the sudden increase in orders, Canaan ran down its inventory in Q2 2020 and has since been laying out a new generation of high-powered, highly-efficient Bitcoin miners. The company said that it has established cooperative relationships with a number of third-party manufacturing plants and has successfully realized the mass production of N+1 chips. Increased mining profitability has also pushed the company to launch its own mining pool, set to launch later this year.
Bitmain, by far the largest global Bitcoin mining hardware manufacturer, also reported that almost all of the models of it produces have already sold out. Media reports from earlier this month showed that there was no indication that the company would offer new products anytime soon.
Experts believe that the main reason behind the latest market surge is the excess liquidity created by loose monetary and fiscal policies around the world. Chen Bo, the director of the Digital Finance Research Center at the Central University of Finance and Economics, said that the U.S. Federal Reserve’s massive purchases of inflation-protected securities have unwittingly been fueling Bitcoin’s rally. All of that, he explained, has led to greater profits for mining hardware suppliers. Chen told the Global Times that some mining hardware manufacturers are doing so well that they even have plans to list in the U.S. While it’s unclear which companies he had in mind, the fact remains that Bitmain, Canaan, and Ebang, all Chinese companies, account for more than 90 percent of the global market shar.
Priyeshu is a software engineer who is passionate about machine learning and blockchain technology. He built his first digital marketing startup as a teenager and worked with multiple Fortune 500 companies. He's an alumni from mass-transit app Ola and holds a degree in computer science engineering.
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