Russia-Ukraine Conflict May Affect Bitcoin Mining; Here’s Why
The crypto mining industry is facing renewed disruption as the Russia-Ukraine conflict threatens the supply of materials vital for semiconductor production. The industry is still grappling with an almost two-year-old severe chip shortage that has driven up the prices of graphics cards vital for token issuance.
Ukraine and Russia are the Main Suppliers of Chip Components
Ukraine supplies about 90% of the United States’ semiconductor-grade neon, which is an integral part of the lasers used in the chip-making process, consulting firm Techcet said in a report. Russia supplies 35% of the country’s supply of palladium, a rare metal used in the production of some types of semiconductors.
Any outages are likely to have a broad impact on chip supply, which could cause processor prices to skyrocket once again. This could disrupt potential expansion in the mining sector, which is heavily dependent on chip supply.
The White House had warned chipmakers to diversify their supplies in case Russia invaded Ukraine, Reuters reported earlier this month. With a full-scale conflict currently ongoing, supply disruptions are likely in the coming months.
Dutch company ASML recently said it was exploring alternatives to its current neon supply. Other executives in the chipmaking industry also flagged potential hurdles to production if supply is disrupted.
Chipmaking giants Intel and Taiwan Semiconductor Manufacturing Co (TSMC) recently announced plans to increase semiconductor production due to rising demand. TSMC, the world’s largest chip supplier, announced earlier this year that it would invest $44 billion to increase supply.
With Bitcoin’s hash rate, the computing power required to mint new tokens, recently reaching record levels, the mining industry is expected to rely heavily on a stable supply of chips.
Are China-Taiwan tensions creating another threat?
The recent Ukraine conflict has led to comparisons with tensions between Taiwan and China. Any military strike by China is likely to shake up global chip supplies.
Taiwan is the world’s largest semiconductor exporter through TSMC.
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Ambar has over five years of experience covering global financial markets and aims to channel this knowledge into the rapidly expanding world of crypto and DeFi. His interest is primarily in finding out how geopolitical developments may affect crypto markets and what this could mean for your bitcoin holdings. When he’s not surfing the web for the latest breaking news, you can find him playing video games or watching reruns of Seinfeld. You can reach him at: [email protected]
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. Neither the author nor the publication accepts any liability for your personal financial loss.
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