One of the hidden casualties of the Fourth Bitcoin Halving, Bitcoin mining ASIC prices have plummeted over 2024. The decline in hashprice is an obvious culprit – it’s harder to sell machines if the ROI is lackluster. But a glut in supply from over manufacturing could also be affecting demand and pushing down prices. 

“We are seeing more buyers and also wholesalers holding up their purchase post-halving. This is mainly driven by too much supply in the market, and also there’s greater uncertainty in machine prices and mining economics,” the head of an ASIC brokerage firm, who asked to remain anonymous, told Blockspace. 

It’s undoubtedly a buyer’s market, they said, with the exception of the S21 Pro, Bitmain’s latest model which is the most powerful and energy efficient ASIC on the market.

We’ve been here before, of course. In the wake of the Third Bitcoin Halving in 2020, older generation ASIC miners were trading for pennies on the dollar as miners favored newer hardware. Bitcoin miners were jettisoning the S9 and similar models by the pallet-load, often giving them away for free, while demand for the S19 series increased.

But this go around, some of the newer ASIC models in Bitmain’s S21 series could see some significant repricing too, and that’s because Bitmain “might have oversubscribed” their wafer allocation and purchased too many chips from TSMC for the S21 series, our anonymous source said, although they have not verified whether this is 100% accurate.

Blake Davis, an account executive at Blockware, said that he had no insight into whether or not Bitmain over-purchased wafers, but he did note that “Bitmain sales are largely down over the last few years.” Perhaps speaking to the issue of over allocation, he noted that “the constant downward spiral in efficiency rating” from new machines does “entice more miners to buy new products.”

If Bitmain did purchase more chips than it can handle, this could be forcing the company to rapidly release new models in the S21 series. Each new model carries with it meaningful increases to operational efficiency and hashrate production, especially now with hashprice at all-time lows where every incremental improvement makes a huge difference.  

This dynamic has placed miners and wholesalers into a sort of stalemate, where they are foregoing today’s model for fear that tomorrow’s model will be that much better. 

The Antminer S21 series is outdoing itself

Historically, Bitmain has always introduced variants of its flagship models within a series. Last cycle, for example, S19 gave way to the S19 Pro, S19j Pro, S19 XP, and so on. The gap between the least efficient model (the S19) and most efficient model (S19 XP) in this series, though, was a year and a half (Bitmain announced the S19 in April 2020 and the S19 XP in November 2021). 

Now, the gap between the original S21 (the weakest in the series) and the S21 XP (the strongest in the series) is nine months (Bitmain announced the vanilla S21 in September 2023 and the S21 XP in June 2024). 

“They’re releasing models more quickly than ever before,” our anonymous source said, and the speed with which they are releasing new miners could be affecting sales of previous models. 

For example, when Bitmain released the S21 Pro, miners who just bulk bought the S21s were understandably miffed. To mollify them, Bitmain upgraded their orders to S21 Pro units, giving them access to the latest model for the price of the prior model. In turn, this made S21 pricing on the secondary market unattractive, leading to a drop in demand and prices. 

Davis said that the “supply/demand relationship will be interesting to watch in Q4 with the release of the S21 XP coinciding with extreme demand for the S21 Pro.” Public miners have almost exclusively gobbled up supply for the S21 Pro direct from Bitmain, he continued. 

Bitmain antes up to keep its chips on the table

In some sense, the problem is the result of Bitmain striving to keep its edge. 

The ASIC manufacturer builds the most powerful and most efficient ASIC miners on the market in large part thanks to TSMC chips. But to keep its seat at the table, Bitmain needs to progressively order more wafers each year – after all, TSMC supplies chips for the most powerful tech companies in the world, so if Bitmain isn’t dealing in sufficient size, TSMC could snuff out their allocation entirely.

The over-allocation coincides with a particularly brutal mining market where rewards are paltry and margins are gossamer. On its face, you might think that miners would be clamoring for cutting edge hardware, but when the next-best-thing released yesterday will be quickly outdone for the next-best-thing released tomorrow, miners feel “like they overpaid for a model that is now obsolete,” as our anonymous source put it. 

And the problem could persist with Bitmain’s three phase mining ASIC, the U3S21EXPH. Per a spec sheet circulating among bitcoin miners, the new model is due for shipping in November/December of this year, and it could feature a whopping 860 TH/s of hashrate at 13 J/TH. (Blockspace confirmed that the spec sheet in the X post linked above is from Bitmain).

Now, the U3S21EXPH is a hydro-cooled ASIC, not an air-cooled one, so there’s a good chance that it does not have the same effect on the original S21 model as the S21 XP or S21 Pro. It does raise another question entirely, however: why is Bitmain doubling down on hydro-cooled models when the market…doesn’t want them?

In our interviews, both the anonymous source and Davis noted that they have sold numerous immersion models like the M66 series from MicroBT and the S21 immersion model – but they did not mention notable volumes for hydro units. 

Other trends in the ASIC market

Looking beyond the new market for S21 series ASICs, the anonymous source said that demand is still strong for the S19j Pro from miners who can afford to run this rig profitably. 

In the United States and Canada, such miners are those with the lowest cost power, mostly off-grid or behind-the-meter miners. But the anonymous source said that their firm is also seeing purchase for the S19j Pro roll in from lower cost geographies like Africa. 

Africa has a burgeoning bitcoin mining sector that has slowly gained traction over the past few years, but they noted that buying has slowed down amid regulatory uncertainty. Ethiopia, for instance, recently put out new guidelines for hardware importation and licensing which have slowed activity in the region. 

Looking beyond North America to other hot mining regions, the source said that buying volumes in the Middle East have increased, while activity in South America, which has gained traction since last Halving, has decreased. On his side, Davis noted steady activity in Latin America and Africa.