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The new BitMEX report indicates further consolidation in ASIC manufacturing

June 16, 2020

The ASIC-producing Bitcoin Mining Industry (BTC) is due to the fierce competition, geopolitical pressure and investment returns slower after bitcoin halving.

In a new BitMEX report released on June 15, the researchers wrote that “they think only 2-3 players will be able to survive long term“”

The report analyzes the history and the current status of the ASIC industry and focuses on the main actors currently involved: Bitmain, MicroBT, Canaan and Ebang.

The new BitMEX report indicates further consolidation in ASIC manufacturingThe new BitMEX report indicates further consolidation in ASIC manufacturing

ASIC refers to the mining hardware you are using specific chips for integrated circuits, they are adapted for Mining cryptocurrencies efficiently based on a specific hashing algorithm.

On the other hand, the configurations that the GPUs (graphics processor) use are less specialized and therefore so far have struggled to compete for rewards online with those who implement ASIC.

This has led to continuing concerns Centralization across multiple blockchains, because of the increased capital investment costs for potential miners.

The consolidation among the ASIC manufacturers themselves, as can be seen from the BitMEX analysis, implies a increased concentration at different levels the industry.

Consolidation in general?

It should be noted that the BitMEX report not only expects this ASIC manufacturing continues to consolidate. but also mining.

The ASIC manufacturer asked in its questions and answers in the first quarter of 2020 Canaan revealed that:

“Even after halving, we have more and more orders and large quantities. We see that sales are increasingly destined for key customers or large customers. “

BitMEX researchers say they heard it The same message in discussions with ASIC manufacturers MicroBT and Bitmain.

Reasons for consolidation in ASIC manufacturing

The BitMEX report shows this Bitmain, whose market share was 75% during the market in 2017, It has lost dominance to new players like MicroBT in the past 18 months. The latter is expected to account for 35% of the market in 2019.

However, Bitmain remains the “main player” for now, despite “almost facing a corporate governance situation ridiculously lousy in the middle of a Power struggle between his top managers“”

Meanwhile the competitor is Canaan secured a public listing and thus offers more transparency in your operation and result, However, BitMEX points out that:

“ASIC manufacturing is a difficult and difficult industry because the technical leadership of MicroBT and Bitmain could challenge the way to Canaan without a strong Bitcoin lock.”

Ebang, which is also aiming to go public (like Bitmain), faces a “market position” relatively weak in terms of the energy efficiency of their products. “

Other factors that put pressure on industry players include: Trade tensions between the United States and China, The influence of COVID-19 and the political situation in Hong Kong.

Elsa Zhao, Marketing Manager at MicroBT, seems to confirm BitMEX’s assessment and explains:

“The customer base is increasingly leaving China. The recovery phase has grown with the halving […] the difficulty and the current prices. At the same time customers […] You now have larger funds and are no longer small businesses or individuals. […] With Bitcoin cut in half, competition becomes more serious and only the most competitive mining machines will survive. There will likely be more consolidation. “