I agree with this but it's even worse than that.

Estimates on Bitcoin energy usage put it at over 1TW now. I believe it was comparable to the energy consumption of Argentina.

Advocates will defend this by saying most energy usage is renewable. This conjures the image of someone with a bunch of solar panels but the reality is that it's primarily hydro power because that's the cheapest. Thing is, in regions with cheap hydro power, the miners can use so much power they end up making power more expensive for everyone.

I'd be more OK with this if crypto in fact solved a problem for most people. We should start by stopping calling them "currencies". They're not. They're assets. They lack all the useful properties of a currency (eg being massively deflationary)

The only thing cryptos really do is allow a temporary medium of exchange for traditional currencies. Some uses of this are entirely legitimate (eg escaping capital controls in certain currencies). Some are not (ie all the illegal usages).

I really wonder what happens to Bitcoin (or any PoW coin) when it no longer becomes economical to mine new coins. Does all the computing power just move on to the next coin? If so, won't this make the network vulnerable to attack? What is the incentive for people to contribute computing power without the prospect of economical new coins?

> I don’t see much evidence that TSMC ever really slowed production, at least for their most advanced processes that are in high demand.

One thing I heard is that the drought (worst one in 50 years in Taiwan) has really affected them, and various sources seem to confirm it, here's one : https://fortune.com/2021/06/12/chip-shortage-taiwan-drought-...

And while I wholeheartedly agree with the crypto/GPU issue, all in all, the GPU market is overall fairly tiny compared to TSMC's total output.

Most of the GPU issue is linked to massive demand and conservative allocations that were bought by GPU makers a while back. Adding extra allocation because of demand is really hard specifically on constrained high end nodes like GPU uses.

Car makers and others in the industry don't use those nodes, they use older ones and those are equally constrained.

The GPU/crypto issue is the cherry on top of an already very constrained TSMC, it seems.

According to TSMC's chairman, the shortages are mainly due to:

- Covid-19 effects on production

- US-China trade war

- Increased demand due to the pandemic

- Increased 5G demand

- Increased HPC demand

https://asia.nikkei.com/Business/Tech/Semiconductors/TSMC-he...

https://roboticsandautomationnews.com/2021/05/26/tsmcs-chair...

I agree that it is simply an excess of demand, the whole bitcoin rant though. Really?

There is a demand for semiconductors that exceeds supply. You have made a leap that the current demand driver is bitcoin and its consumption of GPUS. As much as I appreciate the sentiment that Bitcoin is a waste, that leap doesn't hold up when you look at the actual numbers for semiconductor demand.

The number one demand item for 7nm semiconductors is cell phones.

If you read the various analysts reports you will find this sums it up well: It(demand) is mainly driven by the increasing demand for consumer electronics and the integration of semiconductor into several devices across sectors like automotive, industrial, communications, military, and others. (that is from this report[1] that for $2500 you too could read it (https://www.marketreportsworld.com/global-semiconductor-mark...))

During the pandemic it appears that everyone upgraded their TV (at least in the US) which, not surprisingly, consumes a lot of semi-conductors. The pandemic has also botched a lot of logistics which will sort itself out but these small bumps can cause unusually large ripples in the supply chain because so many industries are built around "just in time" delivery of raw materials. Semiconductor manufacturing is a process that is intolerant of frequent line starts/stops.

So TSMC, knowing that new fabs cannot come online instantly, has chosen to risk alienating their customers a bit by raising prices to capture the value associated with their assets (productive plants) during this period.

[1] To be clear, I didn't pony up the $2500, I looked at a number of sites that reported on the contents of the reports and pulled quotes from them. Market information is itself a market.

I love how crypto has become easy-to-blame, when in fact datacenter after datacenter is being stuffed to the brim with chips for ML workloads. It's important to recognize when consumers are being squeezed by multiple market forces.

Are they also raising prices of CPUs? Arm chips? Your argument is based on an assertion that sounds like it could be right, but is it? Hasn't every country in the world been injecting cash stimulus into people's hands in an epic attempt to boost demand across all industries? Also why are miners the target here. Are there not deep learning, gamers, anything else who also want to use these monsterous compute units? (GPUs specifically). Raising the price is temporary because someday another chip maker can be born. Every day the lithography tech is getting cheaper and cheaper is just a matter of time till this resolves itself. And let me ask, are chips a human right like water and food? We're getting close but honestly life can go on without GPUs can't it?

Honest question: is it possible to make a cryptocurrency that does not rely on some real-world scarce resource (e.g. chips, electricity, drive space)?

This seems to be a cornerstone of what makes any crypto valuable in the first place (scarcity), and as long as that scarcity has real-world consequences, it seems like it would have the same result.

Chia claimed to "Save the world from proof-of-work wastage", but it would just turn a GPU crunch into a HDD crunch.

While Crypto is certainly a contributor to demand, I think a large part of the problem is related to a demand spike similar to the 'toilet paper shortage', where companies try to stockpile because they hear there will be a shortage, which in turn makes the problem worse. Additionally, COVID stoppages caused chaos in supply.

BTC GPU mining hasn't been profitable for years. ETH GPU mining (the main one) has gotten way less profitable recently and is scheduled to not be a thing in 6 months to a year. The GPU demand for mining has already lessened in the last months and you can see decreased 2nd hand prices..

Every comment that blames BTC for chip shortages is likely largely incorrect and looking in the wrong place.

This could be a possible explanation for the Fermi Paradox. Advanced civilizations almost become space faring, but at around the same time they discover cryptocurrencies and funnel all their planets resources into it, until they become stranded and die out.

Well Bitcoin will die anyway because Ethereum actually does something useful and they’re onto Proof of stake.

Honestly folks should pull their money out and invest in something tangible like starting a business that ACTUALLY CREATES VALUE.

There is an ugly feedback loop scenario where the crypto bubble accelerates inflation due to the high demand crypto places on energy and semiconductors and the proportion of global GDP downstream from energy and semi. Inflation then loops in more demand for crypto assets (as an inflation hedge) creating ugly feedback loop until governments act to break it.

I highly doubt the chip shortage a la increased chip demand from a company perspective has to do with gaming/mining GPU demand.

Much of the supply demand can be traced to increased car chip demand (Toyota cutting production by 40%) as well as general device chip demand across many sectors.

Cryptocurrency miners are handing TSMCs boatloads of money that they are using to grow their R&D efforts. Cryptocurrency, in the long term, will be amazing for the advancement of GPU technology.

(though we should still move crypto away from GPU mining for environmental and security reasons)

The state of cryptocurrencies is nothing more than a visible symptom of larger systemic issues that have clearly gotten out of control. It would be much more beneficial to try and understand why the market has decided to consider it valuable in spite of everything you have said rather than just blame and dismiss it based on its impact. We aren't paying the price for cryptocurrency, we are paying the price for policy that has made cryptocurrency attractive.

GPUs are a marginal factor in this. The main factors are several impacts from Covid-19, US trade restrictions on SMIC chip exports from China (a big supplier of low and mid-range chips which this is actually all about), and the Taiwan drought.

The Covid-19 impact itself is multi-pronged. Many chip plants closed or reduced output due to the lockdowns, but also the silicon used in chip production is the same material used to manufacture vials so vaccine production also impacts high quality silicon availability. Finally early in the epidemic a lot of manufacturers that consume chips, such as car makers, cut production. This lead to some chip foundries being closed as they were non-viable and it's taking a long time for those foundries to get re-commissioned or other foundries to expand to make up the gap in capacity.

> This is yet another way we’re all forced to pay the price for cryptocurrency.

Bitcoin has existed for more than a decade. This is yet another way we're all forced to pay the price for COVID-19.

When everybody started working from home, companies whose employees had desktops had to buy them all laptops. People with old home computers bought newer ones once they started using them 14 hours a day instead of two. Demand went up.

A bunch of car manufacturers thought the pandemic was going to crush demand for cars, so they canceled all their chip contracts. Then it didn't and they bid up the price of chips trying to source all the ones they canceled the contracts on.

The primary cost of Bitcoin mining is the electricity, not the hardware. If there is more demand for hardware, the world can build more fabs. Assuming we're given some advance notice, which this year we haven't had because COVID-19.

And the reason the electricity consumption is bad is that we don't have a carbon tax, so people are burning coal to mine Bitcoin, which is Very Bad. But it's also Very Bad that people are burning coal to power electric heaters or elevators or anything else, because the problem is burning coal.

If people were mining Bitcoin by building wind turbines, nobody would care. It might even improve the world by increasing the economies of scale for renewable energy production.

Is it tragedy of the commons, then? Once things settle, won’t people learn that adding 1 additional GPU only increases my cost by 1 and doesn't increase my reward? Can’t we design a system where the number of transactions processed scales with the compute power of the system rather than striving to always keeping block time constant?

Cryptocurrency chips are less than 5% of TSMCs total production, it's not the major driving force in the shortage.

What ?

Those GPUs are being useful for securing a network hosting close to $100B of stablecoins. https://stablecoinindex.com/marketcap

Not talking about other more volatile crypto as you'd be tempted to assert their values should be 0 in a perfect world.

You can argue all day that's wasting energy, the crypto-ecosystem, chip manufacturers, miners, energy providers, users, developers, traders, bankers and companies driving billion of dollars of revenue (Aka value for human beings who will produce and consume goods in the real World with this revenue ) out of it are proving that you're missing the bigger picture.

I've never understood HN's concerns with crypto. Following the same logic, people are literally burning petrol in their cars while it could be used for <insert supposedly better use case>

Is it for ecological reasons ? You're still moving 2 tons of metal everywhere you go, and eating meat.

Cryptos are not less moral or valuable than plenty of things you do or cherish. Let people mine crypto, eat meat at Wendy's driving their F150, because the world is not black and white.

"Shortage" is a technical term to describe a situation where outside influence is preventing supply from meeting demand at the market clearing price. I do think crypto falls into this category, as well as numerous government policies (every tax creates a shortage).

> It’s frustrating to watch so much of the output

well, frustrating maybe. But you know what, chips production is not like gravity, there are human controlling who gets what chip... Someone, somewhere could better arbitrate things...

And it's not the invisible hand which is, as often, well, invisible.

Don't forget the main advantage of mining over buying coin is to avoid all fiat associated regulations. So it's not just about slightly cheaper tokens, it's really about distributing the cost of tax evasion and money laundering.

I wish some governments would start shutting down the fiat exchanges.

> As long as GPUs are profitable for mining

What crypto currencies are still profitable to mine with GPUs? Not bitcoin - mining btc went to ASICs long ago. Not Ether which is now POS.

I am hoping that someone comes up with a semi-reusable proof-of-work system , like chess board positions, Mersenne primes, or protein folding. Kind of like Re-captcha.

GPUs are not used to mine Bitcoin, they are used to mine Ethereum. Bitcoin is mined by different chips, also made by TSMC, but in far smaller quantities.

Is there any evidence for this claim?

Yes, but efficiency is opposite of roboustness/resiliency.

Are people mining crypto on PS5s and Xboxes?

It's no fun before supply catches up with demand, but when it does, we'll be in a world that has higher chip production capacity and maybe some advances will come from all that extra money chip makers will be making. It seems more promising long term than, some under-produced stagnant technology like nuclear power plants.

Can we say "Bitcoin" when we're talking about Bitcoin and not lump all proof of stake and other very efficient systems in with proof of work coins?