Jeff Fawkes is a seasoned investment professional and a crypto analyst. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.
Four firms are controlling the Bitcoin mining rigs production industry. The biggest gainer? Obviously Bitmain, but who else is in charge of the chip production?
TokenInsight has prepared a report saying that by the end of 2020, these four firms will take complete control over the Bitcoin mining market. Those are the Bitmain, Ebang, Canaan, and MicroBT. During 2020, the companies will eat out 3 percent more from the mining market’s cake. Now, they cumulatively control more than 95% of the network. By the end of 2020, 98% of the market will lie under the firms.
What will the miners do in such circumstances? They typically worry about centralization in the production of area-specific equipment (and code).
According to Johnson Xu, TokenInsight analyst, we can blame the network effect:
“The top four companies consistently have had strong market power in the past; going into the future, this strong market power will translate into the dominant positions of the top four companies.”
Considering that they already have 95% under control, the total power seizure is probably only a matter of time. Johnson Xu sees no possibility that some other companies will enter the field to compete. Cryptocurrencies have many underwater rocks and bugs that can jump out of the blue. Indeed, you can lose all the money or business thanks to a single weak line of code.
TokenInsight predicts that Bitmain will control 63% of the market, while now they have 55-58%. Canaan’s share will increase to 18%, while now they control 10-15%. Bitmain receives such high marks because they have recently withdrawn from the AI development. Xu notes that Bitmain considers AI as a high cost and low profitability venture. Once they finish restructuring business and assets, the market share will grow bigger because they have established names.
Also, Xu thinks Canaan’s market share is about to increase thanks to the IPO that the firm held back in 2019. As for MicroBT, they now have 20-25% of the market, but TokenInsight predicts that they’ll lose positions down to having only around 10%. The issue is in the recent arrest of the company’s founder. As for Ebang, they will keep control over the current 7% that they have.
Selling Mining Rigs Is a Harsh Job
When you try to sell mining rigs, you have to find special clients worldwide, convince them that you’re not a scammer, and establish relationships with them. It is a very hard task and people will have to put a ton of time into logistics and marketing and a support department to power up sales. Bitmain already has all that, including the strong leader who can aim the company’s ship in different directions, not only follow the iceberg-magnetic market trends.
Back in the old days, there were only Bitmain (and probably Bitfury) on the market. They were offering chips that exist. Since then, many of the firms took some of the Bitmain’s mining market share. However, Bitmain developed into the leading company in the industry, providing the best solutions for the best prices to people.
There are thousands of miners worldwide who wait, prey on and order equipment from China every time the company makes sell off party. However, the coronavirus effect may play bad jokes with Bitmain this year, as some of the key parts of the country locked down on quarantine.