Bitcoin (BTC) Mining Chips and Hardware Market to Generate $20B Revenue over 5 Years: Bernstein

The introduction of new U.S.-based players, such as Block and Auradine, is poised to diversify the supply chain and enhance competition

A new report estimates a $20 billion revenue opportunity in Bitcoin (BTC/USD) mining chips and hardware over the next five years. Introduction of new U.S.-based players, such as Block (NYSE:SQ) and Auradine, is set to diversify the supply chain and enhance competition, potentially benefiting U.S.-based miners with improved efficiency and reduced costs, according to Bernstein.

Historically, companies like Bitmain, MicroBT and Canaan (NASDAQ:CAN) have controlled the majority of the Bitcoin mining hardware market. Bitmain, for instance, commands over 80% of the market share. These companies design ASIC chips and assemble them into mining rigs, predominantly using advanced fabrication facilities like TSMC (NYSE:TSM) and Samsung (KS:005930) to mass-produce these chips. Bitmain also operates an extensive ecosystem of after-sales services and one of the largest mining pools, AntPool.

However, the launch of new mining chips in the U.S. by companies such as Block and Auradine marks a pivotal shift.

“The mining chips and hardware market has been historically dominated by China-based companies,” the Bernstein report notes, “but the launch of new mining chips in the U.S. presents an opportunity to diversify the mining supply chain.”

Block, in particular, has partnered with Core Scientific (NYSE:CORZ) to develop advanced 3nm mining ASICs. These chips are expected to offer significant improvements in energy efficiency and computational power compared to the 5nm chips used by current market leaders like Bitmain.

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“The agreement between CORZ and Block focuses on Block's 3nm mining ASICs, developed by its Proto team,” states the report. This collaboration aims to build a customized mining system that integrates software development kits (SDKs) alongside the hardware .

Auradine, backed by Marathon (NASDAQ:MARA), is another new entrant shipping its AT1500 Teraflux miners, which are designed using 3nm ASIC chips with an expected energy efficiency of 14J/TH.

This new wave of competition is expected to drive innovation and provide U.S. miners with more options for fleet upgrades, ultimately reducing the dominance of Chinese manufacturers.

The report highlights two key tailwinds for U.S. miners: the growth of AI GPU chips has decreased the bargaining power of rig manufacturers, leading to historically low chip prices, and the emergence of U.S.-based competitors in mining chips promises to diversify the supply chain further.

“We believe any new competition in the Bitcoin mining chips/equipment is good for Bitcoin mining operator economics, by keeping chip/equipment prices low,” Bernstein analysts state.

As the market evolves, the report underscores the potential for enhanced fleet efficiency and lower capital expenditures for miners. With the added push from political figures advocating for “Make Bitcoin in America,” this shift could signify a robust future for the Bitcoin mining hardware industry in the United States.

As the Bitcoin mining hardware landscape continues to evolve, industry leaders and emerging players will have the opportunity to discuss these transformative developments at Benzinga's Future of Digital Assets event on Nov. 19.

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