Bitmain lost 70% of its production capacity, report finds

Bitmain may have reduced its manufacturing capabilities in China by 50-70% since the cryptocurrency ban, according to an estimate by Luxor Mining.

Bitmain lost 70% of its production capacity

In its latest report about the hash rate of the BTC network, Luxor noted that China’s application-specific integrated circuit (ASIC) mining industry has become illegal almost overnight.

The bans have resulted in cryptocurrency mining businesses migrating to other countries, particularly to Malaysia, where “most of Bitmain’s ASIC manufacturing is now taking place”;

Bitmain is the most popular brand for BTC miners. And as such, the company was rumored to be planning a shift of its manufacturing capabilities outside of mainland China since the ban.

In the report, Luxor suggests that Bitmain’s relocation is likely to have a huge implication on the “already severely disrupted ASIC supply chain”. That’s because any changes should make the machines more expensive.

MicroBT

Another ASIC maker that is also leaving China, according to Luxor, is MicroBT.

According to the research firm, MicroBT began moving manufacturing to Thailand while still considering options in the United States.

“Both Bitmain and MicroBT, undisputed leaders in the ASIC market, have plans to fully transfer their manufacturing capabilities from China in the coming years,” says Luxor.

The company cites not only the Chinese government’s anti-crypto sentiment, but also rising labor costs and high tariffs when compared to the US.

Based on Viridi Funds estimates, a total supply of 115,000 to 175,000 new machines should be expected on average per month in 2022. Of these, 50,000 to 90,000 machines would be from Bitmain. From 25,000 to 35,000 would be from MicroBT and other manufacturers would have 20,000 to 30,000.

In this context, Luxor has identified factory relocation and chip shortages as likely factors to hamper ASIC production in 2022.

The company further added that while Bitmain and MicroBT dominate the ASIC manufacturing landscape, challenging them would be difficult. However, there are newcomers looking for their place in the sun.

The company specifically cites Blockstream. In August 2021, the company acquired ASIC manufacturer Spondoolies.

Additionally, Luxor mentions ePIC Blockchain, which signed a deal with Argo last year for its upcoming ASICs.

“We believe that ASIC manufacturing on this side of the globe will only benefit North America’s growing mining industry. But the region will need foundries that can compete with TSMC and other major semiconductor producers if it wants to be truly competitive with Bitmain and MicroBT.”