What Is the Impact of Vertical Integration (Manufacturer Also Mines) on the ASIC Market?
Vertical integration, where the ASIC manufacturer also operates large-scale mining farms, creates an unfair competitive advantage. The manufacturer can use the newest, most efficient hardware for their own operations before selling it to the public, maximizing their own profits and further contributing to the centralization of hash power.
This practice can also lead to price manipulation in the retail ASIC market.
Glossar
Vertical Integration
Integration ⎊ Vertical Integration in the cryptocurrency sector describes the strategic corporate structure where a single entity controls multiple stages of the value chain, such as owning mining hardware manufacturing, operating large-scale mining farms, and potentially running a proprietary trading desk.
ASIC
Architecture ⎊ Application-Specific Integrated Circuits represent a fundamental shift in computational hardware within the cryptocurrency ecosystem, diverging from the general-purpose nature of CPUs and GPUs to offer substantial gains in hash rate efficiency for specific cryptographic algorithms.