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Bitcoin Mining Technology Approaching the Quantum Tunneling Limit

Bitcoin Mining Technology Approaching The Quantum Tunneling Limit

Bitcoin Mining Hash Rate Has Seen Nearly Exponential Growth Long Term

The Bitcoin mining hash rate has seen an explosive and nearly exponential increase long term, rising through 1 GH/s in July 2010, 1 TH/s in 2011, 10 TH/s in 2012, 1 PH/s in 2013, 100 PH/s in 2014, 1 EH/s in 2016, 10 PH/s in 2017, and as high as 80 PH/s in July 2019, equivalent to 80 million TH/s and 80 billion GH/s. This rapid rise in mining hash rate has been partially fueled by the price of Bitcoin increasing from USD 0.01 in 2010 to over USD 10,000 currently, causing people around the world to compete to get a share of the lucrative Bitcoin mining block reward, which amounts to over USD 100,000 every 10 minutes currently. The other reason that Bitcoin’s hash rate has been rising so rapidly is that the demand for mining technology has caused manufacturers to develop mining rigs with the newest, most powerful, and most efficient technology.

For example, 7 nm chips, meaning the transistors on the chip are 7 nm in size, are the most powerful chips used commercially today. By November 2018, Bitmain had already released mining rigs which utilize 7 nm chips. This was a major jump for the company, since previously 16 nm chips were the best that Bitmain offered. Currently, the most powerful mining rig that Bitmain produces is the Antminer S17 which has a hash rate of 53 TH/s, and this far exceeds the Antminer S1 which had a hash rate of only 0.18 TH/s.

We are officially announcing the release of our new 7nm miners which possess industry-leading hash rates designed to mine with the SHA256 algorithm. Two models will be offered, the Antminer S15 and T15. Available for purchase on 11/8. pic.twitter.com/m6HbWGZS1O

— BITMAIN [Not giving away ETH] (@BITMAINtech) November 6, 2018

Chips with Smaller Transistors Fueling Hash Rate Growth

This massive increase in hash rate is due to mining rigs using chips with smaller and smaller transistor sizes, up to the present-day, cutting-edge 7 nm chips. A very important aspect of decreasing the transistor size is that exponentially more transistors can be fitted onto a single chip, which increases the energy efficiency of mining rigs. For example, the Antminer S1 has an energy efficiency of 0.0005 TH/J, while the Antminer S17 has an energy efficiency of 42 TH/J. This represents an 8.4 million percent increase in energy efficiency from the Antminer S1 to the Antminer S17.

The increase in energy efficiency that results from mining rigs using chips with smaller and smaller transistors is what has paved the way for the explosive rise in Bitcoin mining hash rate. This is because the profitability of Bitcoin mining is primarily determined by the electricity cost, so if energy efficiency had not drastically increased from smaller transistors, then the profitability per hash rate would be much lower. Thus, the total Bitcoin mining network hash rate would be much lower in the absence of transistor size decreases.

Quantum Tunneling Suppressing the Evolution of Transistor Technology

Transistors will have to become smaller and smaller on chips in order to sustain the nearly exponential long term increase in Bitcoin mining hash rate. However, quantum tunneling is a problem for chips with transistors smaller than 7 nm.

Quantum tunneling can be explained by the concept of wave-particle duality. Essentially an electron, which is the fundamental building block of all computer systems, is both a particle and a wave simultaneously. For transistors of 7 nm and bigger an electron stays in its appropriate channels, and the computer functions properly. However, for transistors smaller than 7 nm, the wave nature of an electron can cause it to literally pass through barriers in a transistor, causing leakage of electrons.

In simple terms, if a transistor is small enough, then an electron can teleport through the physical barriers in a transistor. This results in the computer not functioning properly.

The immediate effect already being felt due to quantum tunneling is that Moore’s Law is breaking down. Moore’s Law states that the number of transistors on a chip doubles every two years, leading to an exponential long term increase in computer processing power. However, as transistor sizes decrease below 7 nm it is taking longer and longer to research, develop, and mass produce the evolved next generation of transistors.

For example, transistors from 22 nm to 7 nm use fin field-effect transistor technology (FinFET), but 5 nm transistors required a completely new technology called multi-gate field-effect transistors (MuGFET). The most cutting-edge 3 nm transistors, which are still in the research and development stage, have required yet another breakthrough called gate-all around field-effect transistors (GAAFET). Samsung aims to manufacture 3 nm transistors by 2021, although this is just a projection since it takes years to perfect new transistor paradigms.

Notably, 3 nm transistors are only expected to bring a 20% increase in power and performance, versus the 30% to 40% increase seen during previous transistor evolutions.

Essentially, scientists are developing completely new technologies in order to combat quantum tunneling and to try to stay on pace with Moore’s Law, but the time it takes to develop smaller transistors is increasing, and most importantly, these next generations of transistors are bringing lesser improvements in energy efficiency and processing power.

The Exponential Increase in Bitcoin Mining Hash Rate May Slow down Due to Quantum Tunneling

Therefore, Bitcoin mining technology appears to be approaching an imminent roadblock due to quantum tunneling, and this could slow down the rise in Bitcoin mining hash rate. That being said, Bitcoin mining hash rate also depends on Bitcoin’s price, so if Bitcoin’s price manages to rise strongly long term, then the hash rate could still increase nearly exponentially. On the other hand, if Bitcoin’s price increases slowly over the long term, then the hash rate would essentially plateau.

Also, it is possible that scientists could perfect quantum computing, which would allow Moore’s law to continue. That being said, quantum computing is still in its embryonic stages, and major technology companies are generally focused on making smaller classical transistors in order to increase the power and performance of computers, at least for now.

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Bitmain Sues Ex-Employees for $4 Million

Hong Kong Protests Nudge Bitcoin Demand Up (2)

Bitmain, one of the largest Bitcoin mining equipment manufacturers in the world, is now suing three former staffers behind rival mining pool Poolin.

The chip manufacturer is seeking USD 4.3 million in damages after claiming that the Poolin co-founders were in violation of non-competition clauses, although the defendants are saying that these clauses were made void when Bitmain did not pay their salaries on the agreed time.

Bitmain, who also owns BTC.com, which is the biggest mining pool in operation, has been operating mining pools, which allows individual miners to contribute their computing power to a group, thereby increasing their chances of finding blocks together. Bitcoin block rewards are then split commensurately between the pool participants. Last year until June, this alone accounted for USD 43.2 million of the firm’s revenues. Hardware sales in the same period raked in USD 2.7 billion in revenue.

There are six lawsuits pending in the Beijing Haidian District court. The three Poolin co-founders – CEO Zhibiao Pan; COO Fa Zhu; and CTO Tianzhao Li – had, in fact, filed their own preemptive lawsuits pending in the Beijing Haidian District court, demanding non-competition release.

Bitmain’s counter sue is not only asking for damages by significant losses after operating a competing pool but also to ask for a legal resumption of non-competition.

Last January, in a public commemoration of the 10th anniversary of Bitcoin, a Chinese media outlet published a WeChat post written by Zhu that explained briefly the work the three did while working with Bitmain, launching its original Antpool before proposing a parallel one called BTC.com.

In May, Bitcoin News reported that Bitmain had recorded an 88% drop in internal mining operations.

 

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Tough Times for Mining Equipment Giant Bitmain

Tough Times for Mining Equipment Giant Bitmain

Tough times in the crypto market from the 2018 bear ride may have spilled overboard into 2019 affecting major stakeholders in the industry, however, while recovery on some aspects of the market seems hopeful, mining equipment manufacturer Bitmain experienced an 88% drop in its internal mining operation.

According to a report on Bitmain-owned hardware performance, the hashrate on its SHA265 algorithm dropped from 2.072 quadrillion hashes per second (PH/s) to just 237.29 PH/s in just 30 days. Although this was not the first irregularity in the performance of the miners; in July last year, when it just began disclosing its hashrate performance of the miners, it was around 1,692.05 PH/s and went to as high as 2,339.21 PH/s in October. However, it reportedly dropped to 1,700 PH/s in March. It appears these drop may have had something to do with the fluctuations in Bitcoin price, however, since 2019, Bitcoin’s market has made some improvements.

Diar reported earlier this week on the performance of Bitcoin blocks as well as the improvement in the fees market, with Bitcoin miners revenue reaching USD 300 million and miners earning nearly USD 14 million from fees alone. This apparently doesn’t reflect on Bitmain’s performance.

According to CoinDesk, citing a Bitmain spokesperson who explained the discrepancy:

“It is [in the] natural course of the mining business where the hash rate owned by one body at one instant may be owned by someone else at another instant.”

Series of unfortunate events may have plagued the company as a result of the price downtrend in 2019. Last year, Bitmain was reportedly laying off 50% of its staff, and early this year, had to do a reshuffling of management staff, with a new CEO to run the affairs of the company. The worst hit may have been when its IPO faced challenges from the Hong Kong Exchanges and Clearing Limited (HKEX).

And now, the Chinese government has made moves to ban mining operation in China, which could deal a heavy blow to the mining equipment industry and in no small way to Bitmain.

In late March, Bitmain announced the launch of a new set of Antminers which were touted to be energy efficient. This could mean that while there are problems with mining operations within the organization, the company’s production arm performs better. Moreover, earlier that month, Bitmain said it would be installing 200,000 mining units in China, although this news came before the proposed mining ban, it remains to be seen how Bitmain intends to manage the situation once it unfolds.

 

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China State Planner Targets Crypto Mining on Clean Up List

China State Planner Targets Crypto Mining on Clean Up List

China’s National Development and Reform Commission (NDRC) is looking to siphon off a number of industries which include cryptocurrency mining as part of a state cleanup.

The NDRC of the People’s Republic of China, formerly State Planning Commission and State Development Planning Commission, is a macroeconomic management agency under the Chinese State Council, which has broad administrative and planning control over the Chinese economy. The commission is therefore responsible for rubber stamping or even eliminating industry in the country.

It appears that Bitcoin mining may fall into the latter scenario as the activity has been added to a cull list of over 450 activities under scrutiny due to what it sees as a violation of relevant regulations. The public has been given a month to make their own views felt on the commission’s latest draft, after which, more formal decisions will be taken regarding the future of the named activities.

Such a move has been anticipated within the Chinese cryptocurrency community after ICOs were banned and many exchanges driven overseas after an official shutdown. Although Chinese companies list among the world’s major manufacturers of mining gear and the country remains home to major crypto mining firms, the pressure is on to follow the government line, which remains vehemently anti cryptocurrency, despite top-down official expressions of interest in the burgeoning blockchain industry.

A local state-owned paper the Security Times said that the announcement “distinctly reflects the attitude of the country’s industrial policy”.

A plan by mining giant Bitmain which suggests it is preparing to roll out 20,000 of its own mining units in China to capitalize on the country’s cheap hydroelectric power later this year may well have to be revised dependant on the outcome of the NDRC decision.

 

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Japanese Crypto Unicorn Tops $1 Billion Valuation

Japanese Crypto Unicorn Tops  Billion Valuation

Unicorns — the term given to a startup which achieves a valuation of over a USD 1 billion — are rare in Japan but this week has seen the birth of another as Liquid Group Inc joined the exclusive club.

The Tokyo-based crypto startup made the announcement on Wednesday that it had reached the magic USD 1 billion valuation, securing funds from investors including venture fund IDG Capital and crypto mining giant Bitmain Technologies Ltd.

How it has achieved this aggressive valuation is not totally clear, and as yet Liquid hasn’t indicated how much money it has raised to date, but indications are it may have commitments of about USD 50 million in its ongoing C round. Initially, co-founders Mike Kayamori and Mario Gomez Lozada raised over USD 20 million in prior rounds from investors including Jafco Co and also raised a further USD 100 million through an ICO in 2017.

However, Liquid has got history with teeth, having been able to successfully hook a crypto exchange license from Japan’s regulator, the Financial Services Agency. It also handles over a USD 50 billion cumulative trading volume and has also received anchor investment from IDG a Chinese-owned, American-based media, data and marketing services and venture capital organization — a company which has also funded Coinbase and Bitmain. Jihan Wu, the co-founder of Bitmain sees the new funds as enabling Liquid to be more competitive at an international level:

“Japan is one of the leading nations in putting [the] crypto industry under proper regulations, and Liquid Group has proven itself to be the exemplary player within such compliant rules. This is a very important and unique moat amid global competition.”

Past aggressive valuations at startup include Coinbase which raised USD 100 million in 2017 at a valuation of USD 1.6 billion and mobile payments and crypto trading platform Circle which raised USD 110 million with a massive valuation of USD 3 billion. As of January of this year, Japan was home to just one unicorn, Preferred Networks Inc, compared to 165 in the US.

 

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Bitmain Reveals Next-Gen Antminer S17 Launch Date

mining, bitmain, antminer

Major cryptocurrency mining equipment manufacturer Bitmain has revealed the launch date for its latest technology, the Antminer S17 series.

Comprised of three different models: the Antminer S17 Pro, Antminer S17, and Antminer T17, the series will go on sale internationally on 9 April. Bitmain claims the second-generation 7nm ASIC chips will save 28.6% energy consumption during the mining process. While the company says the S17 series will operate at a higher hash rate, they did not reveal further details regarding numbers.

The company noted that with heavy electricity costs in relation to Bitcoin’s current prices, the ”improved energy efficiency” of the new models will lead to a ”significant drop in costs,” improving the profit margin.

It was recently revealed that Bitmain would deploy 200,00 of its own mining devices to Southwestern China after an executive decision was made that it would be more profitable to do so than to sell them.

A poorly performing cryptocurrency market has influenced fiscally conservative policies for the company. Bitmain closed its Israel center in December and reduced its Netherland operations earlier this year in January.

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Bitmain to Install 200,000 Mining Units in China

Bitmain to Install 200,000 Mining Units in China

Major cryptocurrency mining company Bitmain is reportedly preparing to roll out 20,000 of its own mining units in China to capitalize on the country’s cheap hydroelectric power this summer.

The estimated USD 80 million in equipment may actually provide the company higher profits if it chooses to mine cryptocurrency in China rather than sell the equipment on, a source familiar with the matter shared with CoinDesk.

Bitmain is allegedly already in conversation with local mining farms over a deal to host its equipment, which are cited to be in this case the AntMiner S11 and S15, alongside some older models like the AntMiner S9i/j.

The mining company has been fiscally conservative over the last year, closing its Israel center in December and reducing its Netherland operations earlier this year in January. Bitmain said both moves were part of a long-term, cost-saving road map as it struggles against a poorly performing cryptocurrency market.

Gadi Glikberg, head of the Israeli branch and Bitmain vice president of international sales, said at the time of his branch’s closure: “The crypto market has undergone a shake-up in the past few months, which has forced Bitmain to examine its various activities around the globe and to refocus its business in accordance with the current situation.”

 

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Bitmain IPO Dream Sinks Further After 2018 Q3 Earning Reports

Bitmain IPO Dream Sinks Further After 2018 Q3 Earning Reports

According to Coindesk, cryptocurrency mining rig manufacturer Bitmain lost USD 500 million during its Q3 financials due to a prolonged bear market, citing a recent update on its financial results to the Hong Kong Stock Exchange (HKEx).

According to a source, the company fell short of its quarterly earnings by as much as USD 500 million. In a previous report it submitted to the exchange, it reported earnings for the first half of the year as having USD 1 billion as profits.

The company’s portfolio had reportedly dropped in valuation by as much as USD 100 million at the end of the third quarter compared to the beginning of the quarter. Being a major stakeholder in the Bitcoin Cash fork, it held a lot of stake in the asset, however, the market downturn had severely traumatized the price of the asset to as much as a 70% loss. Its other major assets holdings like Bitcoin, Ether, Litecoin, and Dash had lost 39%, 67%, 42.68%, and 64.31% respectively.

Bitmain had filed for an initial public offering (IPO) with HKEx in August 2018 to allow it list its shares with the exchange which may possibly improve its financials. However, the company has experienced many constraints on all sides. On the part of the exchange, it had claimed that the industry is still immature for such a leap, and the resulting earnings report for Bitmain further buttresses its point.

For months, many crypto-related ventures have been up against an uphill battle of weathering the storm stirred by the bearish market of 2018. For the most part of the year, aspirations to return to the all-time high seasons gradually waned, instead, many companies began to adjust. For Bitmain, it had to deal with the internal restructuring that saw a reshuffling of management staff, office closures of subsidiaries, and layoffs of its staff.

The chances of Bitmain’s IPO to gain approval from HKEX gets slimmer with the numerous challenges besetting the mining hardware giant.

 

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Chip Makers Blame Slow Profits on Mining Slump, Phone Sales Also Down

Chip Manufacturers Blame Mining Slump But Phone Sales Also Down

Taiwanese chip manufacturer United Microelectronics Corporation (UMC) has blamed its 10% drop in revenue for the last quarter of 2018 on a downturn in mining.

Mining hardware sales are always affected when the demand for cryptocurrency is slow, due to reduced levels of mining activity, but there are some who feel mining is too often the scapegoat for a drop in chip sales. TSMC, the manufacturer responsible for supplying chips to Bitmain, were also quick to attribute their losses to a downturn in the crypto market. The company’s co-president Jason Wang commented:

“Looking into the first quarter of 2019, we anticipate further deceleration in customers’ wafer demand, due to a softer than expected outlook in entry-level and mid-end smartphones as well as falling cryptocurrency valuations.”

Some observers have commented that this drop in smartphones sales is more significant than some companies like to indicate as profits from mining hardware have recently outperformed smartphone sales. For example, as mining demand drove up profits significantly in 2017, new smartphone shipments only increased by 2%.

The argument is, given that smartphones are the greatest driver of chip sales, a declining market in mobiles has more impact on chip sales than a decline in the crypto mining sector. Some argue that the makers of cellphones need to address this and develop new markets, particularly in developing areas such as Africa and South America where smartphone ownership is still relatively low.

Companies manufacturing hardware need to diversify, given that cryptocurrency is still in its youth, in order to ride out lean periods. The cryptocurrency market will fluctuate, as clearly illustrated by the last two years. The crypto winter “blame game” will run out of steam very quickly when cryptocurrencies become a fact of life and demand for hardware will be overtaken by demand.

 

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Bitmain Targets Development in Revamped 2019 Business Model

Bitmain Targets Development in Revamped 2019 Business Model

Bitmain appears to be in the process of repositioning itself towards development to make 2019 a far more successful year after the disappointments and layoffs of 2018 as cryptocurrency mining came under pressure.

The Beijing mining giant recently referred to last year’s negatives and positives in its latest roundup, but now seems more focused on how to turn things around after rationalizing its business model, not only through the already much hinted administrative changes at the head of the company but also by targeting development. A company blog has recently clarified its direction in 2019, suggesting that:

“Our mission is to produce hardware and software, as part of our commitment to contribute towards the security and stability of a multitude of cryptocurrencies. We look forward to continuing this effort this year, and contributing to a distributed, decentralized world that empowers everyone.”

Bitmain’s recent blog post sees the cryptocurrency industry stabilizing this year, echoing many analysts’ suggestions that institutional investors will revitalize the markets, and clearly envisages a role for ASICs, simplifying cryptocurrencies in a way that encourages their adoption as both a useful and a usable asset.

The company is not alone in hoping that sensible regulation will lead to greater adoption of crypto finance, although such moves will clearly have to wait in the US, where the SEC is running a skeleton staff due to the prolonged government shutdown.

According to the blog, now that the company has undergone significant staff cuts, there is a feeling at the top that a new leaner operation will support Bitmain’s aim to build a more sustainable and scalable business, and suggests that “part of that is having to really focus on things that are core to that mission and not things that are auxiliary”.

Time will indeed tell if consolidated focus and renewed energy in a scaled down company does make 2019 Bitmain’s year of development.

 

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