Mining Hardware Supply Chain Seeks Alternative Revenue Streams Amid Declining Demand

With demand for cryptocurrency mining hardware having sharply declined following the onslaught of 2018’s bear market, reports are indicating the companies operating in the supply chain behind mining hardware are increasingly seeking alternative revenue streams to offset falling demand from the mining industry.

Also Read: SEC Executive: ‘Cryptocurrencies with Decentralized Structures Not Securities’

Cryptocurrency Bubble Pops for Mining Hardware Supply Chain

Between April 2017 and March 2018, the virtual currency mining hardware manufacturing industry appeared unstoppable. Last year, the multi-year cryptocurrency bull trend was accelerating toward its peak, drawing with it unprecedented media coverage of the virtual currency markets.

With demand for mining hardware at unprecedented levels, companies operating within the supply chain manufacturing mining devices were reporting record sales and witnessing all-time high stock prices. At one point, China’s leading ASICs supplier, Bitmain, was briefly ranked as one of the top ten clients of the world’s largest semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC).

Profit Projections Slashed

According to a report from Digitimes, the party is well and truly over for Taiwanese suppliers of graphics processing units (GPUs), who “have seen their inventories pick up rapidly, and their sales prices have declined to the levels seen in early 2017.” The report, citing “industry sources,” asserts that “[GPU] suppliers may be forced to return to the gaming market to renew growth momentum in second of the second half of 2018.”

In April, CNBC reported that Wells Fargo Securities had slashed its profit forecast for Nvidia due to “falling demand for GPUs [graphics processing unit] used in cryptocurrency,” according to Wells Fargo analyst, David Wong. Later that month, TSMC reduced its projected earnings in response to waning demand for mining hardware. Taiwan’s Gigabyte Technology is also expecting to sell less than 10 million motherboards in 2018 due partly to shrinking demand for mining hardware.

ASIC Manufacturers Turn to AI for Alternative Revenue Stream

Whilst GPU manufacturers are able to refocus their efforts on the gaming market, suppliers of application specific integrated chip (ASIC) miners are exploring alternative revenue streams in order to offset declining demand for mining hardware.

In a recent interview with Fortune, the co-founder and co-chief executive officer of Bitmain, Jihan Wu, was asked of the company’s “priorities over the next few years” – to which Mr. Wu replied investing further resources in the research and development of mining rigs, that “Bitmain will also start to deploy lots of artificial intelligence products into the market.”

Canaan Inc., the world’s second largest ASIC manufacturer, is also looking to the artificial intelligence (AI) markets to bolster its profits, with the prospectus for the company’s proposed initial public offering indicating that it plans to focus on producing chips for AI applications.

Do you think that demand for mining hardware will see a resurgence in the foreseeable future? Share your thoughts in the comments section below!

Images courtesy of Shutterstock

At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.