The EfficiencyTrap: Why our hardware supply chain is a systemic risk ?

[HashRate Hero]

Many people simply forget that Bitcoin is a technical protocol, not just a financial ticker.


In minning we’re all obsessed with J/TH, but we’re creating a massive supply chain bottleneck. If one major foundry goes down, our hashrate is toast. Are we just ignoring the hardware resilience risk, or am I missing something?

[NotFuzzyWarm]

Not missing something, just overthinking.

Two foundries make mining chips - TSMC & Samsung. If one of those 'goes down' there will far more industries affected than just mining as those companies make over 80% of all cutting/bleeding edge chips <5nm in the world. The only other two companies capable of <5nm chips are Intel and Global Foundries and they do not make mining ASIC'S. Think smartphones, video cards, cpu's, network çhips, etc. those are who would be affected with a far larger global impact.

Each company has several advanced node foundries so problems at one would be serious but not the end of the world. Considering the number of miners shutting down or shifting to chase the AI bubble there will be more than enough new or used high end mining gear to go around.

[HashRate Hero]

Not missing something, just overthinking.

Two foundries make mining chips - TSMC & Samsung. If one of those 'goes down' there will far more industries affected than just mining as those companies make over 80% of all cutting/bleeding edge chips <5nm in the world. The only other two companies capable of <5nm chips are Intel and Global Foundries and they do not make mining ASIC'S. Think smartphones, video cards, cpu's, network çhips, etc. those are who would be affected with a far larger global impact.

Each company has several advanced node foundries so problems at one would be serious but the end of the world. Considering the number of miners shutting down or shifting to chase the AI bubble there will be more than enough new or used high end mining gear to go around.

If a TSMC  or Samsung foundry goes down,  while mining ASICs are the least of our worries.

We're talking a total blackout for smartphones, GPUs, and network hardwarethat’s the real problem.



Duplicated the post by error ; and i can't delete this one original post is in minnning section ........... i will lock this one .

[d5000]

Even if there was such a catastrophic supply problem, then miners and attackers would be affected both by the resulting scarcity and price increase.

In other words, mining would become more expensive (because you can't just buy new hardware if you want to expand your mining farm and thus the market price of used ASICs would skyrocket), but attacking Bitcoin would cost more money too.

Probably the hashrate would not "be toast" but instead decline a little bit (if no other influences, like a dramatic fall of the price, are present, but if then these influences would be the main "trigger" of the hashrate decline). Because you can't use Bitcoin ASICs for other stuff and thus they would not be needed in other branches of IT. A CPU or GPU mined coin would probably lose more hashrate, because the mining hardware then would get high prices on the "used" market.

That would not be catastrophic for Bitcoin at all.

[HashRate Hero]

That would not be catastrophic for Bitcoin at all.

Interresting perspective that reminds me about market self-regulation and how it is at the majority more great than theresults we rewad it for .


I am Still learning , would like to ask :  do you think this inherent market stability is ultimately what secures the network against supply shocks?

[dkbit98]

I prefer hardware wallets that are released with open source code, including schematics and full documentation.
With this being available for public anyone can built DIY hardware wallet anywhere is the world, and reduce the risk.
Good example for that is making SeedSigner device, and you can also combine it with Satochip cards.

[d5000]

I am Still learning , would like to ask :  do you think this inherent market stability is ultimately what secures the network against supply shocks?

I would not go that far to say that there is "inherent" market stability.

But there are measures in the Bitcoin protocol that create stability, like the difficulty mechanism. This ensures that even if Bitcoin loses hashrate due to an hardware supply shock or whatever other reason, it will eventually (probably in 2-3 weeks) stabilize again because mining becomes cheaper after the difficulty change. And there is also the fact that mining farms are now profit-driven corporations and no longer hobbyists, that make it more unlikely that the hashrate declines too fast.

The positive long term trend of the Bitcoin price is also a factor. If you are a miner and close to lose profitability because the price falls below your production cost, it can still be a good idea to try to continue mining and hold the BTC until the price recovers. This also slows down hashrate declines, and if you look at history, in major bear markets the hashrate stagnated or only lowered a litte bit, even if there was a 70 or 80% price decline.

Of course if there are mass bankruptcies in the mining sector, the hashrate decline will be faster. But that will also reduce the price of mining equipment, and thus again make it possible for smaller, more risk-prone actors to enter the mining business. It could however harm the ASIC industry. In the end there would be probably a new equilibrium, in an extreme case you would return to FPGA or GPU mining.

But in all scenarios the most important thing is that mining is equally expensive for "good" and "bad" (attacking) miners. The risk for an 51% only increases in an extreme market turmoil where a lot of big miners go bankrupt and small miners aren't fast enough to absorb the hardware, leaving some hardware cheaply for the attackers. Even in that scenario the probability for a successful attack is extremely low, but someone could be tempted to try it.