The cryptocurrency-mining capable chip business is now worth a fortune

Cryptocurrencies aren’t for the faint-hearted. Bitcoin’s price surged from around $900 at the start of 2017 to just shy of $18,000 in December, followed by a precipitous fall to its current value of around $8,000. If you’re spooked by volatility, cryptocurrencies might not be for you.

But for the brave few who want to jump onto the cryptocurrency bandwagon – Ethereum, Bitcoin and Ripple, among others – one of the biggest constraints is setting up power-hungry mining rigs that can mine these coins. Mining involves a process in which networked computers solve tough math problems and simultaneously power the cryptocurrency’s payment network while at it.

Samsung recently became the world’s largest chip maker by revenue, ending Intel’s 25-year dream run after reporting revenues of $69 billion for 2017. In a move to take its lead over competitors even further, Samsung has said that they too have started making crypto-mining chips – better known as ASICs or application-specific integrated circuits.Before the cryptocurrency fever became an epidemic, miners would use standard integrated graphics cards. They then updated to integrated GPUs used by gamers. Finally, when tens of thousands began to get into the crypto business last year, the math problems became tougher and the intensive-processing capabilities from the networked systems rose to the extent that individual computers needed to be fit with these ASICs.

In a statement to TechCrunch, a spokesman said, “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.”

Just how lucrative is the crypto chip mining business? Last year, Taiwanese company TSMC added between $350-$400 million in revenues in Q4 alone from selling crypto-mining chips. As one analyst pointed out, ASICs could account for less than one per cent of its total revenues, but when you consider that Samsung had revenues of $224 billion in 2017, that’s still a billion-plus opportunity for Samsung.

With Samsung already committing to investing $27.6 billion in its Pyeongtaek factory by 2021, Samsung’s trajectory in the semiconductor business hopes to see as meteoric a rise in overall revenue as the value of the cryptocurrencies that its hardware is helping mine – sans the volatility, of course.