TSMC is Profiting from Crypto-Mining
Taiwan Semiconductor Manufacturing Co Ltd (TSMC) accounts for more than half of the global production of semiconductor chips. It sells these chips to giant companies like Apple, Nvidia, Qualcomm, and AMD. The demand for its chips should increase even more due to the requirements of new and emerging technologies. These technologies include cloud computing, artificial intelligence, and even cryptocurrency mining.
According to TSMC, the crypto mining industry is expected to contribute around 10% to the company’s total revenue for 2018. If these projections turn out to be accurate, then crypto mining will become the company’s fastest growing business, as reported by Bloomberg on January 17th.
High Demand for Crypto Mining
Mark Liu, the co-CEO of TSMC, says that his company’s 3rd quarter revenues in 2017 from crypto mining were between $350-$400 million. He believes that super high-performance chips, required for large amounts of computing power, will be needed more than ever before. Heavy duty computing power is a must for crypto-mining.
Ms. Lora Ho, the company’s chief financial officer, confirmed that demand for crypto mining remained strong during the 4th quarter for 2017. She predicts that the trend for high demand in this sector should hold steady for the 1st quarter of 2018. Morris Chang, the founder and chairman of TSMC, states, “The urge to mine cryptocurrency is very strong, and the incentive of course depends on the price of cryptocurrency”.
Mining Rewards Will Not Last Forever
Bitmain, one of the largest producers of crypto-mining rigs, buys many of its chips from TSMC. As long as the demand for bitcoin and other cryptocurrencies continues to rise, the crypto-mining sector should remain a profitable business. However, if the demand dwindles, then so will crypto mining. Furthermore, nearly 17 million bitcoins have been mined already. As the 21 million limit approaches, rewards for mining will only decrease. Demand for chips should also go down once most bitcoins have been mined. Obviously, the same can be said about other mineable cryptocurrencies, as their respective limits are approached.
AMD & Nvidia Also Profiting from Crypto-Mining
TSMC is not the only company that has benefitted from the growth of the crypto-mining industry. More than likely, AMD and Nvidia, the leading manufacturers of graphics processing products, must have profited from over $500 million worth of Ethereum related GPU sales during the 4th quarter of 2017.
AMD stocks have gone up by nearly 300% since early 2016 and Nvidia stocks are up by over 540%. Meanwhile, TSMC’s market share has increased to $212 billion, up nearly 40%. A significant portion of these gains can be attributed to the rapid growth of the crypto-market.
Although crypto-mining is an exciting new industry now, it is not exactly environment friendly considering it consumes way too much electricity. Bitcoin mining alone is said to consume more electricity than Ireland. Electricity and power are currently in short supply, especially in underdeveloped countries of the world where people have to live without it for extended periods of time. We need to be more considerate towards our environment. Otherwise, our future generations will suffer the consequences of our actions.