Samsung Announces It Will Start Producing Cryptocurrency Mining Chips

  • Samsung announces it will start developing cryptocurrency mining chips
  • They expect a boost in profits as they enter the market

Cryptocurrency mining has become a multi-billion dollar industry and even the tech giants are looking to have their share. On the 31 of January, Samsung Electronics announced it was developing specifically designed chips for cryptocurrency mining. By entering the cryptocurrency mining hardware business, Samsung is forecasting higher profits.

Samsung’s latest earnings report disclosed that the cryptocurrency mining activity was very attractive and would certainly increase its profits. The report also confirmed that the South Korean company overtook Intel to become the biggest chipmaker last year.

TechCrunch reported that Samsung already developing its own version of hardware specially designed for mining cryptocurrencies such as Bitcoin, Litecoin or Ethereum. The company revealed that it was already in the making of such hardware:

“Samsung’s foundry business is currently engaged in the manufacturing of cryptocurrency mining chips. However, we are unable to disclose further details regarding our customers.”

Samsung

A Korean-language newspaper, The Bell, reported that the processors Samsung is developing are ASIC (application-specific integrated circuit) chips. These are specifically designed for mining cryptocurrency. According to The Bell, Samsung completed development of its own Bitcoin-related ASIC chip last year and began mass production earlier this month.

Mining Arms Race

The term Mining in cryptocurrency refers to solving complex mathematical problems as a means to verify crypto-currency transactions - a task for which the owners of the hardware used to process such transactions are rewarded with new digital tokens.

In 2013, custom-designed processors for Bitcoin mining were introduced in the market. This new hardware was specifically designed for just one task – cryptocurrency mining. ASICs are processors that have been specially designed for a single computational task, as opposed to the multi-purpose processors we use in computers and phones.

These chips had better performance and lower energy consumption than GPU (graphics processing unit) chips, which are still more commonly associated with the task. These are chips that are custom-designed to carry out a single task - in this case, "mining" Bitcoin or another specific crypto-currency - but not general computing operations.

As the valuation of cryptocurrencies has shot up, so has the demand for these sorts of chips. In recent months, a shortage of high-end GPU cards has pushed up their prices, making the rival ASIC technology even more appealing.

This is still very recent news and it is still not clear when is Samsung going to launch this new product. According to The Bell, Samsung will be working with Taiwanese firm TSMC. The company currently supplies chips for a number of firms set up solely to mine cryptocurrencies, including the China-based mining giant – Bitmain.

While 2018 is expected to be a great year for the cryptocurrency mining industry, some voice concerns that the industry could collapse. The profitability of Samsungs mining activities are entirely dependant on the price of Bitcoin and the strength of competition from dominant players such as Bitmain.

Garrick Hileman, a crypto-currency researcher from the University of Cambridge commented:

"We don't know how low Samsung can sell its chip for and still be profitable. But if Bitcoin's price were to collapse and enter a bear market like in 2014 to 2015, one would wonder if Samsung would stay with this line of business through such a turn."

Garrick Hileman

Samsungs entrance to the mining industry may loosen Bitmains monopoly. However with scarce details on Samsungs strategy and bitcoin prices falling it is hard to say whether their move will really be as profitable as Samsung hope.