Chinese Bitcoin mining machine makers see surge in demand
Published: Feb 24, 2021 12:32 AM


Driven by the continuous growth of cryptocurrency prices, domestic mining machine suppliers, who are at the forefront of the world industry chain in terms of technology and capacity, have had a tight production schedule with some orders valued at hundreds of millions of dollars coming in, mostly from the US and Canada.

Shares in Bitcoin mining company Canaan Creative have risen 318.04 percent this year, while Ebon International was up 82.21 percent as of Friday, Shanghai Securities News reported on Tuesday

Cryptocurrency prices have continued to rise this year, following a big increase last year amid the epidemic. In February alone, the price of a single Bitcoin rose from about $33,000 to $56,000.

The rising demand for Bitcoins has resulted in a surge in orders for the cryptocurrency mining machines, and Chinese firms are in a leading position in the global supply chain.

Canaan Creative, one of the world's largest mining hardware manufacturers, has seen a jump in orders since last year, with North America and Central Asia being the main sources of the surge in demand, the Global Times learned.

Canaan Creative has signed an advance order for 6,400 mining machines with Hive Blockchain, a Canadian-listed mining company, and for 6,000 mining machines with Core Scientific, a US mining giant, a source with the company told the Global Times on Tuesday. The clients are mainly overseas listed companies, multinational companies and fund-backed companies.

Up to now, more than 100,000 units have been pre-sold in the North American market alone, with some advance payments of nearly $200 million, according to Canaan Creative.

Bitmain, another domestic Bitcoin mining hardware manufacturer, also said that all the models of its mining machine have sold out, and new products are not available yet, media reports said.

Market participants believe the main reason for the recent surge in Bitcoin and other virtual currencies is the excess liquidity created by ultra-loose monetary and fiscal policies around the world.

Chen Bo, director of the Digital Finance Research Center at the Central University of Finance and Economics, told the Global Times on Tuesday that the US Federal Reserve's massive purchases of inflation-protected securities are unwittingly fueling Bitcoin's rally.

"The rise in the price of Bitcoin has led to greater profits for mining machine suppliers," said Chen, noting that some Chinese mining machine firms are doing so well that they even have plans to list in the US.

Chen said that the demand is expected to continue for a long time, since now there are a lot of new investors entering the market, and there will be more users from China.

China has a near-monopoly on the world's Bitcoin mining machines. Currently, the world's top three producers of digital currency mining machines are Chinese. Bitmain, Canaan Creative and Ebon International account for more than 90 percent of the global market share, and Chinese miners produce up to 70 percent of the world's total, industry insiders said.

In the face of the sudden increase in orders, Canaan Creative ran down its inventory in the second quarter of last year and began laying out a new generation of high-powered models. 

"In order to solve the capacity problem, we have established cooperative relationships with a number of fabrication plants, and realized mass production of N+1 chips," said the company.

Canaan Creative plans to operate its own mining business this year, the company said.