Backlog: Demand for Bitcoin Mining Gear Outstrips Supply

Bitcoin backlog supply demand cryptocurrencies

Crypto mining equipment is hot property again, thanks to the ongoing bull rally in bitcoin, leading to a backlog in demand for new mining hardware.

Manufacturers are reportedly under increasing pressure to deliver mining capacity, as bitcoin continues to rally beyond 17-month highs. At the time of writing, bitcoin was trading at $12,889, up some $1,580 on the day.

The growth represents an over 200 percent increase in crypto prices since February and confirms that the prevailing bear market of 2018 has definitely come to an end. As a result, miner manufacturers are reporting a return to the same levels of demand seen in late 2017, when there was three times as much demand as supply.

Steven Mosher, head of global sales and marketing at leading manufacturer Canaan Creative, said there had been an uptick in demand for mining equipment in recent weeks.

“The surge in bitcoin resulted in increased demand and supplies were already short ... The current state of the industry is that inventories are down and demand is high.

“It looks like a return to the 2017 Q3, Q4 conditions, where demand was three times the supply.”

Back in late 2017, bitcoin doubled between July and September, before jumping by four times in the final quarter to hit highs of near $20,000.

The latest rally has also helped make the investment in mining equipment pay off over a shorter time period, down to between 60 and 150 days, from 120 to 280 days at previous trading levels.

In response to the demand, Canaan has released a new mining unit that aims to offer over double the hash rate, with more efficient energy consumption than previous models.

However, according to Mosher, the new range is already sold out up to October on pre-orders, reflecting the extent to which demand continues to overtake available supply.

The move has been followed by rivals Bitmain, who launched a new updated S9 batch last week. However, the first production units won’t be available until August. According to industry sources, “bitcoin’s hash rate increase just can’t keep up with the pace of the price jump ... Production capacity is the bottleneck.”

The surge in demand could spell good news for bitcoin bulls. With the wind in its sails at 17-month highs, and increasing throttled mining capacity, this could indicate a natural upward price pressure over the coming months.