Samsung Electronics has announced that the company is making chips that will be specifically used to harvest cryptocurrency coins.
The disclosure was made during the company’s latest earning’s report.
Cryptocurrency is a digital asset (in other words a form of digital money) that is designed to stay secure. It uses cryptography to secure its exchanges making it nearly impossible to counterfeit. Cryptocurrency in particular is classified as a subset of digital currencies. Bitcoin was the first decentralized cryptocurrency.
Nations and organizations across the world have been working towards regulating the increasing value of cryptocurrencies, especially Bitcoin. Many countries have also begun making inroads in the creation of their own cryptocurrency. The European nation of Estonia is hoping to become the first crypto-country in the world. It has is already begun the process of digitizing its government services using Blockchain technology, the tech behind digital currencies like Bitcoin. Additionally, even China, which blocked trading of Bitcoins in 2017, is navigating towards Blockchain. In June 2017, the People’s Bank of China opened its own new cryptocurrency research lab. PBoC, which is the central bank of China, has also made significant investments towards research in Blockchain.
Executives from Citi Bank has previously stated that state-backed cryptocurrencies are key to the adoption of blockchain technology. Head of core cash management for Asia-Pacific, Morgan McKenney said, “If you had a digital dollar, if you had a digital pound, exactly fungible with the note in your wallet and the dollar in your bank account, then you'd be willing to use that digital currency much more throughout your ongoing daily transactions.”
The Samsung Group is one of the biggest multinational conglomerates in the world. Headquartered in Seoul, South Korea, Samsung was started by Lee Byung-chul in 1938 as a trading company. Over the years it expanded and diversified into numerous affiliated businesses. Samsung Electronics is the world’s 2nd largest information technology company.
In the final months of 2017, the value of Bitcoins began to rise exponentially along with other cryptocurrencies. At one point it was trading at $20,000 thus sparking a slew of warnings from experts and analysts. Other cryptocurrencies like Ripple and Dogecoin have also performed incredibly well in the past year. However, in 2018, the value has continued to drop. South Korean government announced that there will be a ban on cryptocurrency exchanges and value dropped below $10,000.
Samsung Electronics has announced that the company is making chips that will be specifically used to harvest cryptocurrency coins. The disclosure was made during the company’s latest earning’s report. The company stated, “In the first quarter, earnings are expected to rise on the ramp-up of 2nd generation 10nm process products for this year’s flagship smartphones and growing demand for cryptocurrency mining chips.”
The company confirmed its new venture to BBC by stating, "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."
The company is making hardware specially designed for mining cryptocurrencies like Bitcoin and Ethereum. These chips are known as ASICs, or application-specific integrated circuits. The demand for these chips has increased along with the rise in the value of cryptocurrencies. Korean media has stated that the company will be working with Taiwanese firm TSMC. However, details are sparse regarding the kind of products it will be making.
However, experts have also noted that the craze around Bitcoins and other cryptocurrencies might be a bubble. James Dimon, the Chairman, President and Chief Executive Officer of JPMorgan Chase said, “It's just not a real thing, eventually it will be closed. I'm not saying 'go short bitcoin and sell $100,000 of bitcoin before it goes down. This is not advice of what to do. My daughter bought bitcoin, it went up and now she thinks she's a genius. It's worse than tulip bulbs. It won't end well. Someone is going to get killed. Currencies have legal support. It will blow up.”
Our assessment is that even though the cryptocurrency market is viewed as highly volatile, more companies and governments are working to adapt to cryptocurrencies as they continue to be popular. The challenge with governments will be in regulation. Samsung has recognized that cryptocurrencies will be viewed as hard cash in the future and have begun working towards capitalizing and monetizing them.