Sure, that remains a concern.
Even Bill Gates has been voicing fears regarding the environmental consequences of using a vast array of computer equipment to produce Bitcoins. After all, Bitcoin mining uses more electricity per transaction than any other method known to mankind.
But much less discussed is the impact mining has on the costs of chips — processors that go into everything from smartphones to computers and TVs to cars.
As noted, how quickly Bitcoins can be minted is directly correlated to how advanced chips inside these specialized rigs are. Miners are issue the cryptocurrency in return for completing massive volumes of computations to verify transactions.
This is what requires a high energy input, but it also necessitates the need of powerful computer equipment.
The profitability of mining increases as the price of Bitcoin rises. It now costs around an average of $5,000 to mine a single bitcoin. And with the digital currency trading around $55,000, fat margins have pushed mining revenue to a record $1.4 billion last month.
Problem arises when even without that growing demand from cryptocurrency miners, the semiconductor industry is struggling with a global shortage. The pandemic, snowstorms in Texas, and fires have caused severe disruptions to production and supply chains.
TSMC and Samsung, the largest chipmakers on the planet, make most of these chips used in cryptocurrency mining. Production capacity for chips have been diverted away from industries that need a continuous supply.
All this has played a part in pushing prices of DRAM chips by over 60% in the past three months. This, at a time when chip prices were expected to fall last year. And now, another 20% rise in consumer chip prices is expected from the second quarter, as the shortage intensifies.
Previous pattern of behavior has shown that Bitcoin mining stops becoming profitable for most miners when the price of the digital currency falls below $3,800.
We clearly are long ways away from that.
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