Intel’s bitcoin mining chip challenges Chinese rig makers like Bitmain and MicroBT by offering fixed pricing
- Intel unveiled its first generation BonanzaMine chip in January, and the first batch will go to Jack Dorsey’s Block and mining firms Griid and Argo Blockchain
- The initiative could undermine Chinese manufacturers Bitmain and MicroBT, which dominate the bitcoin mining hardware market
The Santa Clara, California-based chip making giant unveiled its crypto mining initiative earlier this month and the first generation BonanzaMine chip in January. Jack Dorsey’s digital payment company Block Inc, and two mining firms Griid Infrastructure and Argo Blockchain will receive the first batch of the chips later this year.
Chinese manufacturers Bitmain and MicroBT have a lion’s share of the bitcoin mining hardware market due to the proprietary technology they use to make their high-performing chips. Few competitors appear to have been able to make a chip that can match them until now.
Bitcoin mining, which is earning rewards in bitcoin by using computers to secure the cryptocurrency’s network, has become a lucrative business amid the surge in the price of bitcoin in recent years, enriching the rig makers along the way. The mining industry raked in US$15 billion in revenue in 2021, more than doubled the previous year.
Intel’s entry could weaken the Chinese manufacturers’ pricing power and offer better maintenance services given the company’s close proximity to the miners in North America, industry participants said. The region dethroned China as the world’s bitcoin mining hub as Beijing banned crypto mining last May.
“Having a US-based manufacturer with the size, scale and credibility like Intel is fantastic for the entire crypto industry,” said Dave Perrill, chief executive of Eden Prairie, Minnesota-based Compute North, which provides bitcoin miners with data centers to operate their machines. “Competition is a good thing.”
One chief reason for miners to welcome a competitor like Intel is the current pricing model and purchasing terms, which are set by the top manufacturers, burden their buyers with varying financial risks and operational costs. A fixed price, which will be offered by Intel, provides more predictability.
The manufacturers make pre-orders of their latest models available for buyers before they have the inventory. However, the buyers won’t know the actual price until the manufacturers ship the machines and they are given a price range, said Nick Hansen, chief executive of Seattle-based mining pool and hardware brokerage company Luxor.