Bitmain’s China Operation More Than Halved Since Crypto ban, According to Estimate
Bitmain may have reduced its manufacturing capabilities in China by 50-70% since the crypto ban, according to Luxor Mining estimate. In its latest hash rate index, Luxor which provides analysis, data, and hash rate insights, notes that China’s entrenched application-specific integrated circuit (ASIC) miners manufacturing industry became illegal almost overnight immediately it announced prohibitions on all crypto-related business in September 2021.
The prohibitions resulted in crypto mining business starting to migrate to other countries particularly to Malaysia where it says “the majority of Bitmain’s ASIC fabrication is now taking place.” As the most popular brand for ASIC Bitcoin miners, Bitmain had been rumoured to be planning a move of its manufacturing capabilities out of mainland China since the ban was announced. The relocation is suggested to likely have a huge implication on the “already-severely-ruffled ASIC supply chain” particularly by making the machines more expensive. Later, Bitmain confirmed in October that it will stop shipping its Antminer mining machines to mainland China (excluding Hong Kong and Taiwan) in compliance with Chinese laws.
Bitmain not walking out of China alone
Also joining Bitmain in the ASIC manufacturing leaving China approach according to Luxor is MicroBT. It reports that MicroBT has begun shifting manufacturing to Thailand while still considering options in the US though faced with the challenge of sourcing factory space.
“Both Bitmain and MicroBT, the undisputed leaders in the ASIC market, have plans to completely shift their manufacturing capacities away from China in the coming years,” Luxor states, citing – not just the Chinese government’s anti-crypto sentiment – rising labour costs and high tariffs when compared to the US as other factors that are making the once-blossoming crypto mining spot “a less-than-ideal location for manufacturing.”
Based on estimates from Viridi Funds that a total supply of 115,000-175,000 new machines should be expected on a monthly average in 2022 – Bitmain (50,000-90,000 machines), MicroBT (25,000-35,000) and other manufacturers (20,000-30,000), Luxor identifies factory relocation and chip shortages as likely factors to hamper ASIC production in 2022. It adds that while Bitmain and MicroBT dominate the ASIC manufacturing landscape and challenging them would be tough, there are also newcomers seeking to break through. From Blockstream which last August acquired ASIC manufacturer, Spondoolies, to ePIC Blockchain which signed a deal with Argo last year on its forthcoming Bitcoin ASIC miner, both are emerging as “leaders in North America’s formerly nonexistent ASIC industry.”
“We believe that ASIC manufacturing on this side of the globe will only benefit North America’s burgeoning mining industry, but the region will need foundries that can compete with TSMC and other top semiconductor producers if it wants to be truly competitive with Bitmain and MicroBT.”
Concerns for the mining industry in 2022
New machines are expected to produce approximately 9.5 EH to 15.5 EH per month of total new hash rate. There are indications that top miners which expanded their operations in 2021 – based on a growing interconnectedness between North America and China’s Bitcoin mining industry players over the past year – would want to grow more in 2022. This projected expansion drive raises the concern of the billions of dollars worth of pre-orders set to be delivered in 2022 and whether there will be enough space for the new machines. It is also not certain that Bitmain and MicroBTC, among others, will be able to deliver the ordered machines on time due to market-related conditions.