Just about every industry in the world relies on advanced computers in some way, and that means that they rely on semiconductors as well. Given the massive growth of cryptocurrency, it should come as no surprise that the Bitcoin mining industry also relies on a steady supply of advanced semiconductors. Recently, a wargame report was issued by a major think tank in the United States, and it focused on the increasing tension between China, the United States, and Taiwan. Given the massive role that Taiwan plays in the semiconductor industry, there are several important points that everyone, particularly those in the Bitcoin mining industry, should keep in mind.
Semiconductor War Game Report Issued Recently by US Think Tank
The coronavirus pandemic significantly disrupted supply chains worldwide, and the effects are on full display given the massive semiconductor chip shortage that has impacted numerous Industries. In particular, medicine, automobiles, and video games have been impacted by the semiconductor chip shortage, but cryptocurrency has also been impacted.
Another major issue that could disrupt the semiconductor chip industry further is the potential invasion of Taiwan by the People’s Republic of China. According to the think-tank, the United States may decide to move highly-trained chip engineers from Taiwan to the United States in the worst-case scenario. While evacuating these chip engineers to safety is critical, it could also lead to a major disruption in the global economy. It could cause more than a trillion dollars in damage, twice the annual sales of the entire semiconductor industry worldwide.
US Reliance on Taiwan for Semiconductors Could Be a Major Issue
The United States, like numerous other countries across the world, relies heavily on Taiwan for its semiconductor chip needs. The United States government is aware of this, and Joe Biden realizes he faces a major dilemma. For many years, the United States has embraced the “strategic ambiguity” policy regarding its willingness to defend Taiwan against a military invasion from China. The goal was to keep China in the dark regarding how the United States would respond to prevent them from being too aggressive.
Now, the United States has explicitly stated that it will commit US forces in the event of a Chinese invasion of Taiwan. Even though the United States government recently passed the CHIPS Act, this massive investment in domestic semiconductor manufacturing will take some time to ramp up. In the immediate future, the United States will still be heavily dependent on semiconductor chips from Taiwan.
Taiwan Makes the Vast Majority of Chips
Taiwan’s biggest semiconductor manufacturing company is called Taiwan Semiconductor Manufacturing Co. It is responsible for more than half of all semiconductor chips worldwide, producing more than 92 percent of all advanced chips. As a result, the United States, just like the rest of the world, is heavily dependent on Taiwan for its semiconductors.
Taiwan understands that so many countries worldwide are so dependent on its semiconductors that it has dubbed the industry the “silicon shield.” This means that the semiconductors act as a defence mechanism because it knows that other countries will respond to protect their interests in their semiconductor chip manufacturing industry, so they believe military aid will protect them against an invasion by China.
Should the United States Destroy Taiwan Semiconductor Manufacturing Co.?
In addition, some officials wonder if the United States should bomb the Taiwan Semiconductor Manufacturing Co.’s facilities in the event of a Chinese invasion. The goal would be to prevent this advanced technology from falling into the hands of the Chinese. Even though everyone hopes it will not get to that point, it is in the best interests of the United States to prevent the Chinese military from acquiring cutting-edge semiconductor manufacturing technology. In a lot of ways, semiconductors are like oil, and they are becoming increasingly valuable. Many companies that use semiconductors only have approximately five days of inventory. Just a few years ago, they had approximately 150 days of inventory. This represents a massive shift in the industry, and it is important for everyone to protect themselves.
The Threat To Bitcoin Mining
Given that Taiwan produces not only the vast majority of semiconductor chips but also the overwhelming majority of advanced chips, Bitcoin miners need to be prepared. For example, Bitmain, the largest manufacturer of Bitcoin mining machines, heavily depends on cutting-edge semiconductor chips. The shock to the semiconductor industry could lead to incredible turmoil regarding ASIC inventories, which are used to mine Bitcoin.
Anyone interested in Bitcoin mining has to stock up on spare parts and mining machinery. Establishing strong relationships with suppliers in secure jurisdictions, such as the United States and Canada, is an important security blanket in unprecedented times. This is not unlike the pandemic; relationships with key industry players are critical as tensions between China and Taiwan continue to increase.