Bitcoin and semiconductor shortage
Supply chain shortages begin to reveal many geopolitical dependencies on external actors for different resources, and the overall fragility these dependencies can create for a given country when supply chains are under strain. .
All it takes is a little domino toggle over and the problems spill over into the entire system. It is not surprising that countries are beginning to view these aggravating problems as national security concerns and react accordingly.
Addressing the semiconductor shortage
For example, the US Department of Commerce under the Biden administration has recently been heavily involved in resolving supply chain issues, particularly in the context of semiconductor shortages. From April and May 2021, he met with semiconductor companies involved at different points in the supply chain to better understand and resolve the issues underlying these supply shortages. Following the last of these meetings in September, the Commerce Department sent a request for information to all semiconductor companies across the supply chain to better understand the bottlenecks. and the specific flows of the supply chain as a whole. .
He wants to know where companies are in the supply chain, the nanoscale (nm) node size of their chips, the type of chip or products they produce, estimated sales, product inventory, etc. This is a very comprehensive application, basically asking for everything there is to know about products, sales, stock numbers and everything related to it.
In fact, what he’s trying to do is establish a baseline for a live view of the logistics flow of everything from manufacturing to packaging and product delivery.
This demand has met with serious backlash in Taiwan and South Korea, underscoring the massive geopolitical importance of chip manufacturing capacity in the global economy.
The geopolitical importance of chipmaking
The South Korean Ministry of Trade, Industry and Energy as well as the Taiwanese Ministry of Economic Affairs have both expressed serious concerns about the scope of the information requests. Specifically in Taiwan, where TSMC’s largest chipmaking company is located, politicians have gone so far as to question whether complying with requests for information could provide information that ultimately threatens TSMC’s global dominance. in the future.
Detailed information such as size nm, types of chips produced or who buys them could theoretically be used to position infrastructure investments to effectively pull customers away from TSMC and successfully meet all of their needs. For a country like Taiwan, the importance of the semiconductor industry is potentially a major disincentive for attacks from China. Losing that dominance is perhaps much more important than mere economic considerations.
Given that the United States Senate recently passed the “United States Innovation and Competition Act”, which will spend $ 52 billion to increase domestic semiconductor manufacturing capacity, and the ” CHIPs for America Act ”is presented to the Senate to create an income tax credit for semiconductor companies, Taiwan’s fears may not be unfounded.
The United States has been working to rebuild its semiconductor industry nationwide since the Trump administration, and ironically, a TSMC manufacturing plant in Arizona negotiated under Trump just started construction this summer. Action in this direction quickly accelerated after supply shortages due to lockdowns, as modern computer chips are needed for all sorts of things you wouldn’t expect, like kitchen appliances, cars, and even the lightbulbs.
Bitcoin and semiconductor security
Semiconductors are the oil of the digital age. Each country will need its own national security plan for the reliability of semiconductor supply in the same way they have plans for energy reliability. It is a reality that we can no longer delay in recognizing.
So what does all of this have to do with Bitcoin? ASIC. Mining equipment is useless if you don’t have the energy to power it, but the energy to power the miners is also useless if you don’t have the miners themselves.
When it comes to manufacturing capability of 7nm or less (the peak), the only games in town are Intel, Samsung, and TSMC. This leaves these companies with a lot of political leverage to shed in terms of advanced ASIC manufacturing.
The dynamics of who can and cannot produce semiconductors in general are already at the forefront of policy as nations realize the importance of minimizing reliance on foreign players to maintain such capacity. It is only a matter of time before these Bitcoin mining issues start to grab their attention as well.
What form will it take? Who knows. Perhaps this acts as another accelerator for the great nations to expand their domestic manufacturing capacity. Maybe the countries with the capacities ban the exports of minors to the enemy countries. Perhaps nations are engaged in espionage to acquire intellectual property relating to advanced manufacturing techniques.
Whatever form the achievement will take when it occurs, it will occur and the effect on the mining ecosystem will be interesting to say the least.
This is a guest article by Shinobi. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.