Digital currency mining increased in popularity in recent years because the growing market capitalization of digital currencies ensured that mining remained profitable. This is especially the case for mining farms, which use hundreds of machines to simultaneously mine digital currency.
The term ‘digital currency mining’ refers to a process that involves computers verifying transactions through solving complex mathematical equations. As a reward, the device that solves the equation gets the transaction fee. The process makes use of a computer’s graphics card, meaning more powerful devices are able to earn more money. This subsequently created a huge demand within the market for powerful GPUs.
With most digital currencies operating on a peer-to-peer network, there is no central authority that is able to verify transactions. Here, digital currency mining serves as a solution. Instead of a central authority, miners verify transactions through the automated mining process.
Digital currency mining became such a potentially profitable revenue stream that websites began exploiting the GPU resources of users in order to make money. While there are legitimate applications for websites mining currency as an alternative to advertising, many sites are doing so maliciously in a trend called ‘cryptojacking.’
One thing is increasingly clear; the popularity of digital currencies is consequently creating a new industry in digital currency mining.
Samsung manufacturing ASIC hardware
Recognizing the popularity of digital currency mining and mining farms, Samsung is set to begin producing ASIC chips for the active mining market.
As a major tech giant, Samsung making moves to capitalize on the digital currency trend through the production of their own ASIC hardware is a significant development. Samsung’s involvement not only establishes that increased demand for ASIC hardware is mutating into an industry of its own but also proves that the industry has forward potential.
Purportedly, Samsung’s intent to manufacture ASIC hardware was in the works since last year. According to NewsBtc, local South Korean media reported that Samsung partnered with a Chinese manufacturer of bitcoin mining equipment in 2017 to finish the development of its ASIC chips.
Samsung’s involvement with ASIC production will undoubtedly pressure the currently unchallenged entities that control the majority of chip production. Samsung boasts a market cap of around $372.0 billion USD (over $458 billion CAD) as of late 2017 and trails Apple as the world’s second-largest technology firm by revenue.
With one of the largest semiconductor manufacturing plants in the world at their disposal, Samsung will first supply their digital currency mining equipment to China before spreading to the markets of other countries with high-demand.
The current mining landscape
Currently, the world’s largest chip factory, TSMC, is based in Taiwan. TSMC was the first dedicated semiconductor foundry and currently retains its title as the leading company in the production of components used for graphics cards.
Despite fostering a relationship with Apple as the supplier of 10nm FinFET chips for their devices, TSMC’s dealings with companies like Bitmain still account for a large portion of the company’s revenue.
Bitmain is a major player in the digital currency mining equation. In addition to being a world leader in ASIC chip purchases, Bitmain operates one of the largest bitcoin mining pools, Antpool, and produce their own ASIC-style hardware.
If Samsung’s vast resources are any indication, the relationship between TSMC, Bitmain, and the market for digital currency mining equipment is due for serious disruption.
Gamers and miners
Nvidia, one of the world’s most prominent graphics card manufacturers, unintentionally found itself in the ongoing war between gamers and digital currency miners.
Upset at the scarcity of graphics cards on the market, and subsequently high markups, gamers called on Nvidia to ensure that fewer graphics cards were sold to currency miners. Additionally, reports state that mining farms are purchasing graphics cards in bulk from manufacturers before they’re even available on the market.
Recently, Nvidia sided with the community in their response to the overwhelming use of their products for mining purposes. In an effort to fight the fact that Nvidia-brand graphics cards have become increasingly rare and expensive in recent years, Nvidia called on retailers to limit the graphics card sales.
It’s important to note that ASIC chips differ from traditional graphics cards. ASIC chips are application-specific integrated circuits, meaning they’re designed for a particular use, such as digital currency mining.
However, mining organizations still widely purchase graphics cards.
TSMC — the world's largest chip factory — is all about crypto all of a sudden.
Bitmain is buying ~20k 16nm wafers a month. That's more than Nvidia. pic.twitter.com/ivZOqXvJXu
— James Wang (@jwangARK) January 19, 2018
Additionally, in a post on Twitter, former Nvidia employee, James Wang, highlighted that the world’s largest chip factory, TSMC, is selling more graphics cards components to Bitmain than Nvidia. This means that the digital currency mining frenzy sweeps up even the chips for creating graphics.
A perfect situation
Ultimately, Samsung has a good opportunity to turn an industry reliant on semiconductor foundries in its favour. With Samsung’s having one of the world’s largest semiconductor manufacturing plants on call, they can slowly assert themselves in the market without restraint.
Despite a Samsung spokesperson telling South Korean media they are unsure how much they will make with this initiative, their presence in this market will undoubtedly change the current relationships that exist between Bitmain, TSMC, and, to an extent, Nvidia.
In the big picture, this is further evidence that the popularity of digital currencies inadvertently created a million dollar industry that is taking a life of its own.