Bitcoin mining: The first shot in the 5nm chip war is launched with the launch of "mining TV"

Currently, Bitcoin mining machines are entering the "7nm era". In the fierce competition, 7nm chips will become a battleground for the entire Bitcoin mining industry. Although the 7nm war has just begun, leading competitors have already begun to lay out the next battlefield and put the development of 5nm chips on the agenda.

Canaan Creative is the world's second largest Bitcoin mining machine manufacturer, with a current global market share of 20%. Canaan Creative's Marketing Director Chen Feng was interviewed by Caijing magazine and talked to me in detail about the company's latest progress in chip and product research and development, as well as the opportunities and anxieties of the entire Bitcoin mining machine market.

Chips enter the 7nm era and seize the 5nm era

Bitcoin mining machines are currently in the stage of competing with three generations of chips: the last two generations of 16nm chips, the last generation of 10nm chips, and the latest 7nm chips. Although 16nm chips are the most mature, their physical limits are approaching the ceiling.

Compared with the 16nm process, which has reached its peak, the potential of 7nm chips is far from being tapped. The maximum computing power of 7nm chips can reach 48T, and the power consumption can be reduced to half of that of 16nm. The large-scale application of 7nm chips is a trend not only in Bitcoin mining, but also in the entire high-end manufacturing industry. Huawei and Qualcomm are also launching 7nm chips one after another.

In early August 2018, Canaan Creative took the lead in releasing mass-produced 7nm chips, and at the same time released the Avalon A9 mining machine equipped with 7nm chips, with a computing power of 30TH/s, which is twice the computing power of the mainstream Ant S9 mining machine in the market.

Nearly two months later, Bitmain, the world's number one Bitcoin mining machine manufacturer, also announced the launch of the 7nm chip BM1391, but did not announce the mass production time, and the published mining machine parameters were only laboratory data. If calculated by mass production time, Canaan Creative is likely to pull ahead of the first place Bitmain by several months or even half a year in the 7nm competition.

However, despite using the most advanced 7nm chip process, the Avalon A9 mining machine's computing power consumption ratio is not the best on the market. The Avalon A9 mining machine is 85W/T, which is higher than the Shenma mining machine M10 (66W/T) using a 16nm chip, and the Xindong mining machine T2turbo+ (69W/T) using a 10nm chip. Chen Feng also admitted that there is still a lot of room for improvement in the current 7nm chip mining machine: "We are the first to try 7nm, which is a stepping stone. Someone must make a breakthrough in 7nm before there can be subsequent optimization and iteration."

Although the Shema M10 uses 16nm chips and has achieved a computing power of 30T and a power consumption ratio of 66W/T, it will cost a lot to increase the computing power and reduce the power consumption, and there is no market value. Compared with continuing to promote 16nm chips, most mining machine manufacturers will focus a lot of energy on the research and development and iteration of 7nm chips.

Chen Feng told me that he believes that in the next stage, every mining machine manufacturer that survives the competition in the Bitcoin mining industry will develop 7nm chip mining machines. In order to gain an advantage in the competition, they will continue to deepen the technology research and development on 7nm chips. In addition to Avalon A9, two 7nm chip mining machines with computing power of 39T and 48T will be released one after another. Within half a year, Canaan Creative will have a major breakthrough in the research and development of 7nm chips, including computing power and power consumption.

At the same time, 5nm chips have been put on the research and development agenda: "We started planning for 7nm after 16nm came out, and now we are allocating some energy to 5nm." He said that the iteration cycle of chips is 2-3 years, and if you want to lead in research and development, you must plan ahead. "This industry is very cruel. Even if you are ahead, as long as you lag behind by one generation, you will fall behind, and it will be difficult to catch up."

The AI ​​ambition behind “Mining TV”

Bitcoin mining giants are beginning to realize their ambitions in AI chips. They do not want to miss the opportunity to replicate their R&D capabilities and experience accumulated in the field of digital currency chips to the field of AI chips.

Blockchain computing and artificial intelligence (AI) deep learning are similar in that both rely on underlying chips for large-scale repetitive and parallel computing. The design experience accumulated by digital currency mining companies in blockchain ASIC chip design is highly consistent with the technology required for neural network chip design. Therefore, both Bitmain and Canaan Creative have already made a lot of investments in AI chips.

In terms of AI chips, the strategies of mining machine giants are divided into two routes. Bitmain previously focused on the research and development of AI cloud chips, providing AI cloud services for enterprises, and recently launched terminal AI chips. Canaan Creative is moving faster in the application of AI chips, and recently released two products that seem a bit "nonsense": mining TV and mining heater. In fact, this is an attempt to implement its ambition to deploy AI chips.

According to data released by Canaan Creative, the mining TV uses a 43-inch 4K screen, has a computing power of 2.8TH/s, and consumes 280W of power. The mining heater has a computing power of 15TH/s and consumes 1500W of power. "Maybe you will find that the money you earn is enough to buy this TV while mining, which is equivalent to giving it away for free," said Chen Feng.

It sounds tempting, but can you really make money while watching TV and warming yourself by the fire?

Under the total network computing power on October 18, 2018, if the TV is turned on all day, it can earn about 0.0001 bitcoins per day. The heater has a higher income, earning 0.0005 bitcoins per day. Based on the current price of Bitcoin of about 46,000 yuan and the electricity fee of 0.5 yuan per kWh, the daily income is 4.6 yuan and 23 yuan, and the electricity fee is 3.36 yuan and 18 yuan respectively. This also means that the net income per day is 1.24 yuan and 5 yuan respectively.

Although there is a few dollars of income every day, this is only a temporary situation. The computing power of the Bitcoin network will increase significantly every month. Maybe in a few months, the mining income of TVs and heaters will not be enough to cover the electricity bill.

Home blockchain has also begun to become the next layout direction for Bitcoin mining machine manufacturers. Obviously, mining machine manufacturers are no longer satisfied with miners and mining pools with a relatively narrow customer base, and they hope to expand the market to more ordinary C-end consumers.

For mining machine manufacturers, the ultimate home application will be very extensive, and AI chips will be used in medical care, smart homes, etc. Chen Feng believes that this is a market with huge consumption. "The heater and TV are mainly considered from two aspects: when the price of the currency is low, the heater turns the electricity consumed by mining into the heat needed for heating, which is equivalent to using free electricity for the scene that originally needs heating. On the other hand, we believe that the family is one of the important scenes for the future development of blockchain and artificial intelligence, so we use these two products to cut in first and lay out the future."

Bitmain launched the Antminer S9 Hydro in August 2018. This mining machine is a water-cooled version of the previous S9. The official claims that it can reduce noise, speed up heat dissipation, and help reduce mining operation costs. At the same time, it reduces the requirements for professional mining environments, allowing miners to mine at home. Some mining pools and miners believe that this is an attempt by Bitmain to transfer mining from professional mining farms to homes. Unfortunately, the actual effect is not as good as expected.

Canaan Creative has been developing ASIC chips for artificial intelligence (AI) solutions since 2016. Applications include smart homes, smart cities, smart surveillance, voice and image recognition functions in smart toys, and IoT applications.

Does this mean that in the future, Bitcoin mining companies may directly compete with smart home manufacturers such as Xiaomi? Chen Feng indirectly denied this inference. He emphasized that the main purpose of making smart homes and smart appliances is to find landing scenarios for AI chips. AI chips are the focus of Bitcoin mining companies.

Overseas markets are experiencing a sudden bear market

In the bear market that lasted for nearly half a year, Bitcoin mining machine manufacturers encountered difficulties. The bear market is directly related to market demand and the gross profit margin of mining machine manufacturers, which will directly affect the income of mining machine manufacturers.

For example, the price of Antminer S9, a mainstream mining machine on the market, has dropped from a peak price of more than 30,000 yuan to the current 2,000-3,000 yuan. Some American mining farm owners said that they even sell it below cost in overseas markets. This is also the dilemma faced by all mining machine manufacturers, including Canaan Creative.

Chen Feng is also anxious about the current cryptocurrency market situation. In his opinion, the market situation determines the state of the entire industry and also determines the market's enthusiasm for the industry.

During the bear market, companies in the cryptocurrency field flocked to go public. Bitmain and Canaan Creative are the first and second in the global mining machine market, monopolizing nearly 90% of the mining machine market. Canaan Creative submitted its prospectus to Hong Kong in May this year, and Bitmain also completed its prospectus submission to the Hong Kong Stock Exchange at the end of September. Huobi, one of the world's three largest cryptocurrency exchanges, attempted to go public through a backdoor listing. According to an announcement disclosed by the Hong Kong Stock Exchange, on August 21, 2018, HUOBI GLOBAL acquired 71.67% of the shares of Tongcheng Holdings, a Hong Kong-listed company on the main board, for a total acquisition price of approximately HK$590 million.

Many industry insiders believe that the concentrated listing of cryptocurrency companies in the past few months is to achieve a blood transfusion in the bear market through IPO. However, Chen Feng denied this view, saying that for them, listing is a process that takes 2-3 years to prepare, and the arrival of the bear market is only about half a year. In addition to considering the development of the company, the listing also wants to bring a more recognized operating environment to the industry.

Although the demand and gross profit margin of mining machines have been affected in the bear market, the overall revenue of mining machine companies including Bitmain and Canaan Creative has generally increased significantly this year compared with last year. Chen Feng told me that this is because after the cryptocurrency bull market boom in the second half of last year, the industry's influence has risen, a group of new investors have entered, and brought more demand.

Among the new demands, overseas markets have become a new source of demand, with North America and Southeast Asia being the hottest regions. Chen Feng revealed that many orders in these two markets start from tens of thousands of units, which has promoted the upgrading of the industry. However, due to limited chip production capacity, mining machines were in short supply in the second half of last year and the beginning of this year, and Canaan has not yet achieved a large market share in the overseas market. This year, the overseas market will become its focus.

Bitmain also showed a trend of targeting overseas markets this year. Since 2015, the company has successively established R&D centers in San Francisco, Israel and other places, but in 2018, its overseas layout suddenly accelerated, and the United States also became a focus. In July, Bitmain opened a 20,000 square foot office area in San Jose, Silicon Valley, and in August launched a new blockchain data center in Rockdale, Texas.

Previously, most of the global demand for mining machines came from China. Under the influence of this bear market, overseas markets may become a hotbed for a new round of competition among mining machine manufacturers.

Source: Caijing Magazine