In the current bitcoin boom, mining companies are scrambling to strike as much currency as possible. But their business is hampered by covid-19 and the crackdown on crypto in China, but also grunts in the global supply chain.
Specifically, blocked channels of global commerce and commerce have delayed shipments of âminers,â the PlayStation-sized computers that run day and night to mine bitcoin.
This intrusion of the real and physical world into the virtual realm has caused bitcoin mining companies to charter jets to move their miners, training to fix faulty computers., and eagerly awaits ports to release their imported machines.
And in this crypto bull market, delays are critical. âEvery day that a miner is not online is a missed income opportunity,â said Charlie Schumacher, spokesperson for Marathon Digital Holdings, a Las Vegas-based mining company.
The cost of a bitcoin mining computer has tripled
For Marathon, 2021 has been a great year; by mid-year, it had ordered nearly 130,000 miners from Bitmain, a Chinese manufacturer shipping the machines from its factory in Malaysia. Advance orders turned out to be a wise move, Schumacher said. Marathon set an average price of around $ 3,000 per machine, but given the surge in the value of bitcoin, an order placed today will be close to $ 10,000 per machine.
However, getting the machines to facilities in Marathon, Montana and Texas began to prove problematic. By the end of the summer, said Fred Thiel, CEO of Marathon, the door-to-door delivery time for a miner had dropped to 30 days, almost twice as much as in the spring.
âGlobal logistics issues have forced people who traditionally ship by sea to shift their high-value cargo to the air,â Thiel said. Freight forwarders were not able to easily find cargo space on commercial flights. “And the other bottleneck was customs processing at US airports on arrival.” The Marathon computers were arriving at Chicago’s O’Hare International Airport, which had become saturated with imports.
In October, Marathon began chartering its own planes to transport miners from Malaysia to the United States. âIt’s like we’ve become a specialist logistics manager,â Thiel said. Marathon was also able to route its flights directly to Dallas, where “Customs had more capacity to process shipments,” he said. âI hope things will improve around the spring. But as long as it makes sense, we will continue to charter planes. “
Bitcoin mining companies pull their machines out of China
Last year, mining company BitDigital began moving its machines out of China, to sites in the United States and Canada. It was as if the company had some idea of ââwhat was to come, said Sam Tabar, BitDigital’s chief strategy officer. In May 2021, when the Chinese government indicated that it would ban all mining of cryptocurrency, BitDigital still had around 20,000 machines in the country. âAt this point, we have accelerated the migration,â Tabar said.
Most of BitDigital’s machines have reached the company’s sites in the United States and Canada. âThese are delicate machines,â said Tabar, âso they have to be wrapped in Saran Wrap and then crated very delicately. They do not always reach us intact. We need to run diagnostics on every machine once it’s here, and some got dusted or shaken during shipping.
In the perfect storm of supply chain issues, machine migration has been hit with severe delays, some as long as a month. A final batch of machines – less than a thousand, Tabar said – are still stranded on the New York docks. The container has been on the ship for some time, Tabar said, and is now ashore, awaiting release.
Buying new machines in a rush is not an option, Tabar noted. âThe wait could go on for a while next year, and even then there is no promise,â he said. “In crypto, it’s a long time.”
How to Cope During the Supply Chain Crisis
Businesses also face other types of delays. Colorado-based mining company Riot Blockchain wanted to build two new buildings on its bitcoin farm in Texas, where a technology known as immersion cooling would drain heat from all the twist machines. But the initial plans implied a 36 week delay in procuring the required steel, said Trystine Payfer, spokesperson for Riot Blockchain. Instead, the company opted for an aluminum structure made by the Canadian firm Sprung, which could be assembled in half the time.
For Hut 8 Mining of Toronto, supply chain entanglements have forced a different kind of creativity. It was no longer practical to return defective miners for repair to MicroBT, the company’s manufacturer in China, said Sue Ennis, head of investor relations and corporate development at Hut 8. And like the newly machines. They also took a long time to arrive, it was important to use minors that Hut 8 had already exceeded the recommended lifespan of 18-24 months.
âSo we became an authorized repair shop for MicroBT, the only one in North America and Europe,â said Ennis. Hut 8 now repairs not only its own machines but also those of others. âOur team is now trained to extend the life of these machines, and if pushed, they can be up to five years. If it hadn’t been for the supply chain issue, we might not have focused on this as hard as we have. “