Opinion: Institutions Have Created a Collapse in the Bitcoin-Mining Market

The market for Bitcoin-mining hardware has entered a “collapse” — demand exists, but supply is scarce. ForkLog spoke to Dmitry Ushakov, BitRiver’s data centre’s chief commercial officer.

“It should be noted that manufacturers cannot meet demand for their top models,” he noted.

According to Ushakov, sharp purchases of equipment in large volumes can be explained \”only by the arrival of large institutional investors interested in the S19 Pro, M30S++\\M30S+ and other top variants.\”

He emphasised that their business model entails long planning horizons:

“Consequently, they are prepared to ‘hold’ cryptocurrency, not sell, covering mining-related costs, and to wait for a rise. This reduces pressure on the BTC price. Miners of previous generations simply do not meet their criteria.”

Ushakov also noted that additional pressure on manufacturers was driven by the American company Core Scientific. In June it signed an agreement with Bitmain to purchase nearly 17,600 Antminer S19 units.

Manufacturers’ production capacity for mining equipment is booked through the end of 2020, and for some until February 2021, Ushakov said.

“Of course, you can deploy equipment from the previous generation, but how long it will remain profitable is unknown,” he noted.

The expert added that investing large sums in such miners today is risky:

“Especially given the speed of upgrading the ‘old’ fleet and replacing it with top models.”

Ushakov stressed that the market situation contradicts the view that mining is ‘a thing of the past’:

“The market deficit says otherwise — high, unmet demand that follows supply, which indicates latent potential, opportunities for growth, and the ability to increase volumes.”

The potential of the market is also reflected in gradually increasing inflows from institutional investors, Ushakov concluded:

“Before border closures, we observed a rise in applications specifically from such investors.”

That bitcoin miners faced a shortage of equipment was previously reported Chinese media.

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