Why Are the Costs of Bitcoin Mining Asics Increasing: So Where Are They Going Next?

The cost of ASICs, the processing components that are essential to Bitcoin mining, has increased dramatically this year. But why is this so? And who knows where they’ll end up next. The increasing price of bitcoin mining ASICs are components essential to the specialized computers used to protect the Bitcoin network in return for Bitcoin incentives, maybe due to various reasons, including supply constraints. Supplies are running out, shipping channels across the globe are clogged, there is increasing demand from Chinese miners who are moving outside of China, and there is a soaring demand and interest in cryptocurrency in general. Before we move further into our guide, please register yourself on Bitcoin Hero, and take the opportunity of a lifetime and trade with Bitcoin.

Moreover, as the costs of ASICs continue to increase, the most popular mining rigs are becoming increasingly difficult to come by — Bitmain’s Antminer S19j Pro, for example, is now advertised on the company site for $9,300. Unless a mining firm has placed a preorder or entered into a fixed-term contract with an ASIC supplier, it is typical for new gear not to be delivered until at least Spring 2022, if not later.

In a recent study, Zack Voell of Compass Mining looked at the fast growth in costs for mining equipment, and he calculated that there had been a 25 percent increase in Q3 2021, a trend he blames for the increasing price of bitcoin. According to Voell, who wrote in a recent issue of Compass Mining’s newsletter, “Seeing prices across various types of ASICs rise between 20-40 percent this quarter isn’t surprising, considering bitcoin’s price recovery over the same time.” The cost of ASICs, the processing components that are essential to Bitcoin mining, has increased dramatically this year. But why is this so? And who knows where they’ll end up next.

If The Chips Have Been Down

Computer chips are by far the costliest component in an ASIC rig and orders backlog due to the global scarcity of a broad range of industrial goods, including microprocessors, phones, cars, and other electronic components and components. It is mainly the wafers in short supply – tiny discs of silicon used to hold a chip together to construct integrated circuits.

According to Zhang, ASICs used for bitcoin mining account for less than one percent of Samsung and TSCM’s total sales, with chip customers such as Apple and automobile manufacturers well ahead of the competition.

While it seems that the rising value of bitcoin will continue to push up ASIC costs, it appears that other variables will have an impact on the market as well. Furthermore, Colin Harper, research and content director at Luxor, believes that Bitmain will close its remaining production facilities in China. “Do you believe ASICs are now prohibitively expensive?” Harper was the one who inquired. Next year seems to be the “hold my beer” moment for even higher costs, as manufacturing move [out of China] from their current locations.

However, according to Mow, the ongoing Chinese closure does not significantly influence the pricing of ASICs. According to him, “the ongoing Chinese crackdown (including the most recent edict that prohibits the sale of mining equipment inside China) is excellent for bitcoin decentralization but has had little effect on the pricing of ASICs.” “The ASIC market has disassociated itself from the Chinese market and is far more impacted by the continuing worldwide scarcity of chips, which were never produced or sold in China in the first place,” says the author. Vera anticipates a short-term drop in ASIC pricing as many miners, especially those moving from China, abandon their attempts to establish themselves in other countries.

“We may see a short-term drop in ASIC pricing as miners get frustrated with infrastructure delays and agreements fall through,” Vera said. “There have been dozens of scheduled mining projects throughout North America that have failed to produce this quarter, and there will be many more in the future.” Major infrastructure failures will very certainly result in a period of ASIC liquidation.” Meanwhile, in his forecast for the future from his newsletter, Voell emphasized the tried-and-true rule regarding ASIC prices: that the price of bitcoin would eventually drive the cost of mining rigs (as opposed to the other way around).

“Obviously, in whichever way bitcoin’s price moves, ASIC prices will go in the other direction,” he added. For miners, a bullish market would be beneficial in terms of paper gains on equipment values. A pessimistic result may be a welcome present for miners who are seeking to expand their fleet of equipment.”

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