3 ms·

Heaven forbid the manufacturers actually, you know, increase production to meet the demand for their hardware.

• Jtsummers 6y ago
  Haha. That doesn't always work. The present demand is spurred by the boom phase of a potential boom-bust cycle (similar to oil). You have two (actually more) sources of demand: crypto, conventional buyers (retail and industry customers). If they adjust production upward (which requires an investment of capital) to meet the present demand then they reduce their profit, prices will go up (at least a bit) to compensate. But they also face another risk: what if there's a bust? If the crypto demand for hardware bottoms out (whether because of a change in crypto or having satisfied the demand) they will be left with excess capacity and potentially excess inventory. The increased production capacity may be able to be redirected to other productive endeavors, or it may just end up idle. And the excess inventory has to be sold off at a potential loss as the hardware becomes worth less and less as each day passes (plus holding inventory costs money). Instead, if they leave production as is (or only increase it slightly) they can virtually guarantee their products will sell out and increase the prices because they know people will continue to buy it. Obviously, the retail and industry customers get screwed because they have less profit to make (if any) directly off the hardware purchase, but the miners will continue to buy almost without regard to the price because their profits (presently) justify the investment.