Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
Bitcoin news and comment
Production costs are skyrocketing with inflation and supply chain issues, and Bitcoin hardware is no exception.
Inflation is everywhere. Lockdowns, war and an ongoing shipping crisis have caused the costs of goods to balloon, from food to microchips, as strained global trade infrastructure shows no signs of returning to normal.
Shortages of key components now threaten the electronics industry, making it more expensive to maintain quality standards, while the average person faces a drawn-out inflationary spiral affecting every aspect of their lives. Bitcoin is an answer, but it is by no means enough to offset all the damage.
What happened to the cost of living?
According to American President Joe Biden, it couldn’t be simpler: “Let’s be absolutely clear about why prices are high right now: COVID and Vladimir Putin”. This bare-faced attempt at redirecting blame for the historical price hikes comes despite inflation having already reached an alarming 7.9% before Russia’s invasion of Ukraine. Of course, the story does not end there.
Everything is becoming more expensive because in our interconnected world, global shutdowns and trade bottlenecks have seen supply chains suffocate while demand continues to grow. While our ability to grow food has been somewhat impacted by a lack of available workforce, it is the policies enacted by governments that have led to total supply chain collapse, not disease or war itself.
Money printing is by far the biggest culprit, exacerbated by policy-led goods shortages, rather than the other scapegoats governments are pushing to the forefront. The profits celebrated by equities traders have hidden the fact that more dollars in existence means each dollar is worth less. Economies are being manipulated, as they have since the end of the gold standard, and the average citizen is now faced with paying more for essentials, without seeing any increase in their salary.
Most of us looked forward to a swift economic recovery as lockdowns began to end in the West, but it is now becoming clear that the effects of two years’ supply chain disruption will take many more years to rectify. As commodities like metals, paper, food and electronics prices reach new highs, the continued growth enjoyed by global markets is stalling and on the precipice of collapse.
How does this affect the hardware wallet market?
In late 2021, Trezor made the difficult decision to delay orders by up to three months as the global chip shortage saw component delivery times extend from a couple of months to over a year. While we managed to stabilize production shortly after, another supply shock in 2022 has caused chip foundries to fail to fulfill orders made many months ago, in favor of supplying their largest clients, mostly phone and car companies.
With several recent orders of chips now delayed indefinitely, the supply of Trezor wallets will be limited at least until the years’ end. Acquiring chips for the Trezor Model T directly from manufacturers has become almost impossible, while resellers have increased their prices to over 15 times the original cost, meaning the chip alone is now more expensive than the final product. To avoid sacrificing product quality or risking customer security with chips bought from untrusted vendors, the price of both hardware wallet models will need to be increased yet again.
From today, the cost of Trezor hardware wallets will be increasing to ensure their continued availability for as long as possible. We hope this will be a short-term measure to preserve access to security as Bitcoin approaches a critical point, and that we will soon see these production bottlenecks lifted. Since last year, we have had component orders awaiting fulfillment not just for 2022, but for 2023 and 2024 as well.
The failure of chip manufacturers to meet global demand and repeatedly missing delivery schedules highlights the dire state of the electronics industry at present. The shortage which was once expected to last several months is now certainly going to affect markets for many years as the backlog of chip orders increases.
We have continued to buy chips at very high prices while sustainable, and we are negotiating with suppliers across the globe to meet our customers’ needs. We are doing everything we can to procure chips, even at many times above fair rates, and hope to see long-awaited orders fulfilled at the beginning of next year.
Bitcoin will fix this
Although Bitcoin exists in the digital world, its monetary policy serves the physical space equally well. Monetary supply of the fiat dollar has increased from $15T to almost $22T in just two years, leaving price inflation as the unavoidable result, despite successfully hiding the impact of government policies at first. Bitcoin’s stable supply upends this model of literally throwing money at the problem, and would force governments of the world to enact more sensible policies that tackle the problems head-on, rather than masking them.
Wages are not increasing in line with inflation. At current official rates, our purchasing power will more than half in the next decade. There is no place in the economy for you to store today’s earnings for tomorrow. Only Bitcoin provides an answer. The continued debasement of one’s stored value means the time spent working and saving for retirement is rendered futile, and we are all destined to live out our final days in poverty thanks to unbacked money.
While the price increases will hurt in the short term, Bitcoin’s time to prove itself has come. As a store of value, it is the only way to fight back against centrally-planned monetary policy. With talks of CBDCs manipulating the spending habits of otherwise free people, building savings in Bitcoin is the only tool we have to avoid the otherwise inevitable loss of freedoms. Don’t wait for intervention from the state — that’s what got us in this mess in the first place.
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.