Bitcoin Market on a Rollercoaster Amid Semiconductor Supply Shortage

[Asia Economy Reporter Su-yeon Woo] Recently, as Bitcoin prices have become more volatile again, the semiconductor shortage phenomenon is intensifying in the Bitcoin mining market as well. Since the COVID-19 pandemic, an imbalance in semiconductor supply and demand has appeared worldwide, affecting not only the automotive, mobile, and home appliance markets but also smaller markets such as Bitcoin mining.

According to the industry on the 26th, as Bitcoin prices recently surpassed 40 million won, the price of Bitcoin mining machines is also soaring. The Chinese cryptocurrency mining machine manufacturer Bitmain's miner, the 'Antminer S19,' is trading at $2,767, a 45% increase compared to November last year. It is known that this mining machine is equipped with an ASIC (Application-Specific Integrated Circuit) made by TSMC.

Bitmain's Bitcoin miner 'Antminer S19'/Photo by Bitmain

This sharp rise in mining machine prices is due to increased mining demand following the recent rebound in Bitcoin prices and the tightening supply of key components such as semiconductors. To operate Bitcoin mining machines 24 hours a day, semiconductors capable of processing vast amounts of data, such as GPUs (Graphics Processing Units) and ASICs, are essential.

The cryptocurrency industry explained that amid the global semiconductor supply shortage, foundry companies supplying semiconductor chips to mining machines, such as TSMC and Samsung Electronics, prioritize supplying stable-demand markets like home appliances and mobile devices first, resulting in a semiconductor shortage in the mining market.

An industry official said, "Semiconductor manufacturers are implementing priority supply policies for industries such as home appliances, so the semiconductor shortage difficulties in the cryptocurrency market may not end in the short term," adding, "If the situation prolongs, it could affect cryptocurrency supply and prices."

This phenomenon is also impacting the global DRAM market. In particular, in China, where the cryptocurrency mining market is concentrated, signs of rising prices are appearing starting with the spot prices of PC DRAM, which is a leading indicator of fixed prices for DRAM. According to market research firm China Flash Market, the spot price for DDR4 8GB PC DRAM modules sold through Chinese channels was $30.5 as of the 19th, about a 23% increase compared to the fixed transaction price of $24.8 in the fourth quarter of last year.

Sun-woo Kim, a researcher at Meritz Securities, said, "As the supply shortage of semiconductors for automotive, home appliances, and mobile sectors intensifies across the board, combined with increased mining demand in China due to rising cryptocurrency prices, the spot price of DRAM in China is rising," adding, "The local price increase in the growing Chinese market is highly likely to lead to price hikes in mainstream markets such as Taiwan."