Bitcoin mining hardware makers are on track to net $1 billion in revenue this year

This year is on track to become the most profitable year for bitcoin mining hardware makers since 2018.

Major Chinese manufacturers Bitmain, MicroBT and Canaan are expected to deliver more than 300,000 units of their top-of-the-line mining equipment within 2021, based on The Block’s analysis of public disclosures from more than a dozen institutional buyers.

And that doesn't count any private deals that may have been struck behind the scenes.

These institutions typically disclose either the number of machines they ordered or the order’s total dollar value — but rarely both, which means the average cost per unit remains confidential. Yet based on archived quotes that Bitmain has published on its website and information gleaned from the pre-orders announced by Marathon on December 28 and Riot Blockchain on April 7, the average unit price for the newest generation of bitcoin ASIC miners appears to be around $3,000.

That means the 300,000 units that Chinese manufacturers are expected to ship this year will generate revenue of over $900 million. This number excludes recent orders made by Genesis Mining, which did not specify their total units but only the total value ($93 million), as well as Canaan’s $66 million contract liability as of December 2020.

All told, these manufacturers could be expecting more than $1 billion in 2021 revenue, provided that they ship the promised machines on time.

The current global chip shortage has significantly limited the production capacity of Bitmain, MicroBT and Canaan. These companies design application-specific integrated circuits (ASICs) but rely on semiconductor manufacturers for the fabricated silicon wafer. So far, however, it appears manufacturers have not encountered any notable shipment delays.

“We have not experienced any meaningful delays with shipments from Bitmain or MicroBT," said Mike Colyer, CEO of Foundry, the mining subsidiary of Digital Currency Group. "I think both are struggling with enormous demands, but have handled the increased volume within their normal delivery windows.”

The table below shows the publicly disclosed orders made so far this year by 15 institutions, and the number of machines that have already been delivered or are expected to be delivered later this year.

Number(s) go up

The Block reported in February that 10 institutions, mostly North American companies, had placed big bets on bitcoin mining hardware. They were estimated to have spent more than half of a billion dollars to purchase around 200,000 units of the newest generation of machines, and the hardware was scheduled to be delivered this year and next year.

Since then, these institutions have continued buying. In addition to the 300,000 units pending for this year, buyers have pre-ordered 100,000 units for delivery in 2022. The pending shipments would add more than 27 exahashes per second of computing power to the Bitcoin network. That equals around 20% of the system's current total capacity.

Of the 300,000 units, more than 220,000 are coming from Bitmain, which suggests the historically dominant miner manufacturer could be set to reclaim the market share it lost in recent years to competitors like MicroBT and Canaan. 

The intense internal power struggle between its co-founders Jihan Wu and Micree Zhan also had a material impact on Bitmain’s business in 2020. The management issue was settled earlier this year when Jihan Wu, one of the company’s co-founders, officially stepped down as chairman and left the company.