Global shortage of chips affects China’s bitcoin ‘mining’ sector

Global shortage of chips affects China’s bitcoin ‘mining’ sector

Global shortage of chips affects China's bitcoin 'mining' sector

an hour ago

The picture shows representations of virtual currency bitcoin. File/Reuters

A global chip shortage is choking the production of machines used to 'mine' bitcoin, a sector dominated by China, sending prices of the computer equipment soaring as a surge in the cryptocurrency value boosts demand.

A cryptocurrency is a digital currency that can be used to buy goods and services, but uses an online ledger with strong cryptography to secure online transactions.

Analysts said that the scramble is pricing out smaller miners and accelerating an industry consolidation that could see deep-pocketed players, many outside China, profit from the bitcoin bull run.

Bitcoin mining is closely watched by traders and users of the world's largest cryptocurrency, as the amount of bitcoin they make and sell into the market affects its supply and price .

Trading around $32,000 on Friday, bitcoin is down 20% from the record highs it struck two weeks ago but still up some 700% from its March low of $3,850.

"There are not enough chips to support the production of mining rigs,“ said Alex Ao, vice president of Innosilicon, a chip designer and major provider of mining equipment.

Bitcoin miners use increasingly powerful,