Back in December 2009, Satoshi Nakamoto commented that he would want the community members to stop the GPU arms race and said, “It’s nice …
When the crypto winter struck the market in 2018, analysts predicted that crypto mining would also see a downturn. Some miners did hang their boots in the aftermath of the Bitcoin crash. However, one year down the line, Bitcoin mining is growing stronger than ever.
Bitcoin mining- the industry most ignore
Bitcoin mining is becoming more profitable, thanks to the recent rise in prices and the rise of Bitcoin mining pools. In the early days of the coin, mining could be done by an individual using their CPU, but now, large Bitcoin mining pools are using advanced ASICs designed for mining to maximize profits. Back in December 2009, Satoshi Nakamoto commented that he would want the community members to stop the GPU arms race and said, “It’s nice how anyone with just a CPU can compete fairly equally right now.” Fast forward 10 years and the Bitcoin hashrate is now dominated by large mining pools.
Currently, the biggest chunk of Bitcoin mining is attributed to BTC.com, which controls over 20.1% of the mining power. F2Pool controls 14% hashrate, Antpool controls 11.1% and Poolin controls 10.9%. SlushPool is another dominant pool with 8.7% hashrate with ViaBTC, BTC.TOP, BitFury, etc. contributing the rest.
In the case of Bitcoin Cash, the hashrate is distributed much less evenly with BTC.com dominating 26.7%, Pooling and AntPool controlling 8.5% each and Bitcoin.com controlling 6.6%.
How do miners stay profitable?
In December 2018, after Bitcoin prices suffered constant downturns, only five mining rigs were profitable. The reason behind their success could be lower electricity costs (the biggest expense for miners), at 13 cents per kWh. As of August 2019, over 40 mining devices were profitable at the same electricity prices. The top performer was Microbt Whatsminer, followed by three models by the largest Bitcoin mining company Bitmain. The Whatsminer is profiting by $10.49, and Bitmain’s three new Antminer S17 series miners can easily go to $9 per day.
However, Bitmain still remains the top mining firm followed by Canaan, Ebang, Innosilicon, Strongu, and Microbt. Bitmain is now considering a public listing on a US stock exchange owing to the massive profits that its business generates. Thanks to mining, the semiconductor industry is also getting a heads up. The International Technology Roadmap for Semiconductors and the 7 nanometers (7nm) node design is now a reality. Taiwan Semiconductor Manufacturing Company (TSMC) recently received an order for 30,000 7nm chipsets from Bitmain which further confirms that Bitcoin mining isn’t slowing anytime soon.
Viraj has been writing for FXTimes covering Cryptocurrencies and Forex news for 2 years now. Also known as ‘Sherlock’, Viraj comments on the latest businesses emerging in the blockchain industry. His areas of expertise are Bitcoin and Blockchain. He enjoys covering new startups and busting myths across the industry.
… algorithm has become a thriving industry that hasn’t stopped growing. Also Read: Exploring the SLP Token Universe Built on the Bitcoin Cash Chain …
A decade ago when Satoshi Nakamoto unleashed the Bitcoin network, the security behind the protocol was guarded by only a few miners. These days, mining the SHA-256 algorithm has become a thriving industry that hasn’t stopped growing.
Every waking second of the day, bitcoin miners are crunching numbers, humming away in facilities that few people who use the network have ever seen. Miners from large facilities who form giant pools stem from a variety of provinces around the world. In the early days up until 2010, individuals mined bitcoin with a central processing unit (CPU). This was until people like Laszlo Hanyecz, the man who traded 10,000 BTC for two pizzas, and Artforz mined the cryptocurrency with a graphics processing unit (GPU). Artforz was an anonymous individual but became the talk of the bitcoin community during the early days after he created the first “farm” of GPU miners. In July 2010, Artforz said he had about 4% of the global hashrate at the time, mining 1,700 coins in six days. Less than three months later, people claimed the anonymous individual’s “Artfarm” controlled between 20-30% of the network hashrate.
A year before Artforz fired up his GPU farm to mine bitcoin, Satoshi Nakamoto asked the community to slow down on the mining arms race in December 2009. “We should have a gentleman’s agreement to postpone the GPU arms race as long as we can for the good of the network. It’s much easier to get new users up to speed if they don’t have to worry about GPU drivers and compatibility. It’s nice how anyone with just a CPU can compete fairly equally right now,” Nakamoto said at the time. The GPU arms race sparked the creation of the first mining pools in November 2010, when Marek Palatinus, otherwise known as “Slush,” formed a pool (Slushpool) because “mining became very hard for other people” after GPU enabled computers entered the fray. With mining pools, a collective of individual miners sharing profits became all the rage, and the summer of 2011 saw the inception of field-programmable gate arrays (FPGAs).
As soon as FPGAs were created, many bitcoiners knew application-specific integrated circuits (abbreviated as ASIC) were on the way very soon. Unlike the machines used in the past, ASICs are integrated circuits that have one specific job, which is to mine the SHA-256 algorithm. ASICs and pools quickly turned bitcoin mining into an industry and hobbyist miners began to contribute less over the next few years. Moreover, mining bitcoin without an ASIC became unprofitable and the CPU, GPU and FPGA days quickly came to an end in 2013. Roughly around this time, Avalon released its first set of ASICs and bitcoiners witnessed the birth of companies like Bitmain, Kncminer, Hashfast, Bitfury, Cointerra, and Butterfly Labs (BFL). From here the mining ecosystem went into overdrive and digital currency fans saw giant mining pools like Ghash.io and Btcguild gathering 51% of BTC network’s mining power. Many of the mining manufacturers are now bankrupt but some companies like Bitmain, Bitfury, and Slushpool have remained relevant over the years.
The Exahash Era, SHA256 Between Two Chains and Pool Distribution
The BTC network’s hashrate did not surpass 1 exahash per second (EH/s) until January 25, 2016. A year later, after August 1, 2017, well known and unknown mining pools processed both BTC and BCH transactions that summer and still do to this day. In mid-November, during the crypto bull run of 2017, the BTC network processed 10.8 EH/s, while the BCH network was around 5 EH/s. Interestingly, when markets plummeted downward in 2018, SHA-256 hashrates continued to climb, seeing little downward pressure. This was the highest profile split in history where two chains with the same algorithms saw large mining pools jump back and forth between chains depending on profitability. Moreover, on November 15, 2018, when the BCH/BSV split occurred, miners from the BTC network stepped in during the hashwar. Additionally, after the BSV fork, both BTC and BCH chains saw a considerable drop in hashrate and price per coin. Both chains have been gradually increasing in value and gathering far more processing power in 2019.
Currently, between BTC and BCH, there’s a whopping 75-80 EH/s processing both chains, with 75 EH/s on BTC and 2.24 on the BCH network today. There’s no doubt 80 EH/s is a monumental milestone for the BTC network and the metric is steadily approaching 100 EH/s, which would be 20% of one zetahash. One zetahash per second (ZH/s) is an unfathomable 1,000,000,000,000,000,000,000 (one sextillion) hashes per second. After the November 2018 hashwar, the 4-5 EH/s of processing power split into two (BCH and BSV) and both chains saw a low of under 1 EH/s. The BCH chain has gradually seen an increase of hashpower and has gathered over 2 EH/s in recent months.
During the second year of the nascent BTC network, the processing power was only around 10,000,000,000,000 (ten trillion) hashes per second (10 TH/s). Because the tech has improved a great deal, a single mining rig can produce over 10 TH/s these days. After the second year anniversary of the split in 2017, the BCH hashrate is thousands of times larger with the network’s maintained two quintillion hashes per second. The BCH chain has roughly 14-15 known miners and around 29% of the overall hashrate from unknown pools. There are 12 known miners processing BTC transactions at the moment and 14% of the mining power is controlled by unknown miners as well. Additionally, six well-known BTC mining pools also mine the BCH chain as there’s sustained hash dedicated to both networks at all times. The four largest BCH mining pools are Btc.com, Antpool, Poolin, and Bitcoin.com. Btc.com is also the biggest pool mining on the BTC network followed by F2pool, Antpool, and Poolin.
2019 Mining Rigs and Next-Generation Semiconductors
In December 2018, during the crypto winter’s lowest of lows, only five SHA-256 mining rigs were profitable at the time. At an average electricity cost of $0.13 per kWh, machines that produced more than 28 TH/s profited at only $0.27 to $1.39 per day depending on the model. Now more than 40 mining devices on the market are profitable at 13 cents per kWh based on electric costs at current exchange rates. The top mining rigs profiting the most include a device by Microbt Whatsminer, and three models by Bitmain. The Microbt Whatsminer M20S (70TH/s) is profiting by $10.49 per day and the three newly manufactured Antminer S17 series (50-56 TH/s) can make a touch above $9 a day. Top mining manufacturers in the second half of 2019 include firms like Bitmain, Canaan, Ebang, Innosilicon, Strongu, and Microbt.
It will be interesting to see how the mining industry develops over the next 10 years. There’s a lot of money and electricity being used to mine SHA-256 coins and it doesn’t look like it will be slowing down anytime soon. Many of the aforementioned mining chip manufacturers above have made massive amounts of money and have become some of the largest IT companies in the world. Because of this, large mining firms like Canaan and Bitmain have filed for an initial public offering (IPO) in the U.S. Last December, the mining equipment maker Ebang filed a draft IPO prospectus with the Hong Kong Stock Exchange (HKEX).
Mining has also bolstered the International Technology Roadmap for Semiconductors by introducing machines that utilize the 7 nanometer (7nm) node design. Production of 256 Mbit SRAM semiconductors using a 7nm process started in 2017 in Taiwan. China-based mining manufacturers have deployed a variety of newer mining devices that use next-generation 7nm semiconductors. Bitmain has released more than five different miners in 2019 with 7nm chipsets stemming from the Taiwan Semiconductor Manufacturing Company (TSMC). Local reports in China have revealed that Bitmain recently placed an order for “30,000 7nm wafers from TSMC.”
The Taiwan-based foundry also reportedly expanded capacity for 7nm wafers due to large orders from IT companies like Bitmain. SHA-256 mining rigs using the 7nm technology are producing hashrates between 30-70+ TH/s according to 2019 device specifications. If mining continues to be popular and there’s enough demand to improve the mining process and industry, spectators will see much faster machines in the next few years. For instance, TSMC has already announced a 6-nanometer (N6) process is in the works and the tech is scheduled for risk production in Q1 2020.
For now, the SHA-256 mining industry remains a lucrative business even though there’s been a number of failed operations along the way. The ecosystem has grown mature since the days of Butterfly Labs, Cointerra, and Hashfast. Instead of hearing about individuals commanding a lot of hashrate like Artforz, you now hear about giant size pools racing to find newly minted coins. It’s safe to say that the industry will continue to move at a breakneck pace and even the largest pools will have to remain vigilant in order to stay relevant.
What do you think about the SHA-256 mining industry in 2019? Let us know what you think about this subject in the comments section below.
Disclaimer: Readers should do their own due diligence before taking any actions related to the mentioned software, companies, mining manufacturers, mining devices, pools, and any of their affiliates. Bitcoin.com or the author is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, company, software or service mentioned in this article. This editorial review is for informational purposes only.
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Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for news.Bitcoin.com about the disruptive protocols emerging today.
Bitcoin Cash (BCH) had a good 24 hours as the cryptocurrency jumped $1.19 or 0.37% trading at $320.59. According to International Crypto Analysts, …
Bitcoin Cash (BCH) had a good 24 hours as the cryptocurrency jumped $1.19 or 0.37% trading at $320.59. According to International Crypto Analysts, Bitcoin Cash (BCH) eyes $352.65 target on the road to $802.97. BCH last traded at Coinbase exchange. It had high of $324.77 and low of $305.08 for August 10-11. The open was $319.40. About 112,986 BCH worth $35.48M traded hands.
Bitcoin Cash (BCH) is down -9.16% in the last 30 days from $352.93 per coin. Its up 9.49% in the last 100 days since when traded at $292.79 and the annual trend is up. 200 days ago BCH traded at $132.11. BCH has 17.94 million coins mined giving it $5.75 billion market cap. Bitcoin Cash maximum coins available are 21.00 million. BCH uses SHA-256 algorithm and PoW proof type. It was started on 01/08/2017.
Bitcoin Cash (BCH) is a hard forked version of the original Bitcoin. It is similar to bitcoin with regards to its protocol; Proof of Work SHA-256 hashing, 21,000,000 supply, same block times and reward system. However two main differences are the the blocksize limits, as of August 2017 Bitcoin has a 1MB blocksize limit whereas BCH proposes 8MB blocks. Also BCH will adjust the difficulty every 6 blocks as opposed to 2016 blocks as with Bitcoin.
Bitcoin Cash is a proposal from the viaBTC mining pool and the Bitmain mining group to carry out a UAHF (User Activated Hard Fork) on August 1st 12:20 pm UTC. They rejected the agreed consensus (aka BIP-91 or SegWit2x) and have decided to fork the original Bitcoin blockchain and create this new version called “Bitcoin Cash”. Bitcoin Cash can be claimed by BTC owners who have their private keys or store their Bitcoins on a service that will split BCH for the customer.
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Bitcoin Cash backer, Roger Ver is no longer the CEO of the controversial crypto company Bitcoin.com.
Ver ‘Promoted’ to Executive Chairman
Ver, one of the more polarizing personalities within the crypto space appears to have been removed as the CEO of his company — Bitcoin.com. The website now lists Ver as “Executive Chairman,” with Stefan Rust as CEO.
Rust’s LinkedIn page has him listed as the Corporate and Business Development chief at the company before his promotion to the role of CEO. As at press time, there has been no official announcement about the organizational change by the company.
Ver and Bitcoin.com have come in for criticisms over claims that the platform tries to deceive people into thinking BCH is BTC. Ver continues to be an advocate for the argument that Bitcoin Cash is superior to the leading cryptocurrency.
Ver’s removal also echoes a similar change in the hierarchy at mining giant Bitmain. in late 2018, Bitmain underwent an organizational restructuring that saw Wu (a close ally of Ver) exit his seat as CEO.
Is Ver Ditching Bitcoin Cash?
Since the news broke, and without any official word from Bitcoin.com, there have been rumors on social media that Ver might be exiting the BCH shilling arena. In 2018, Ver told Bitcoinist that he held more BCH than BTC.
There is some conjecture that Ver might have been forced out as CEO of his own website with the company looking to launch its exchange platform. Ver’s previous exoneration of Mark Karpeles — the ex-Mt. Gox chief might not be a good fit for a new exchange platform.
Before the 2017 hard fork, Ver had been a staunch BTC evangelist even earning the moniker “Bitcoin Jesus.”
Ver was also a major player in the BCH vs. BSV hash war that occurred in late 2018. The former “Bitcoin CEO” sided with Jihan Wu against Calvin Ayre and self-proclaimed Bitcoin creator, Craig S. Wright (CSW).
The tussle with Wright also involved a legal case with CSW suing Ver for libel. Roger Ver allegedly called Wright a fraud for claiming to be Bitcoin creator; Satoshi Nakamoto — a view held by many in the crypto space.
Venture capital research institution, CB Insights, has revealed that Bitmain is the second most backed blockchain company by investment.
Venture capital research institution, CB Insights, has revealed that Bitmain is the second most backed blockchain company by investment. The “Blockchain Trends in Review 2019” assessed the current state of blockchain projects and investor trends. Notably, the Institute of Financial Technology of Renmin University of China worked on the core content of the data-oriented report.
Accordingly, the report looked at various aspects but equity investment trends stood out. Trends in venture capital constantly change. This is because venture capital initially went toward exploring Bitcoin as a currency company. At the moment, more capital is going to the CIS economy and vertical sectors for financial services. Even so, investment could drop from the $4.1 billion invested in blockchain last year.
Regardless, this is still higher than the 2017 total investment. As such, the entire industry is still in a great place from years past. Startups are increasingly attracting traditional equity in traditional investments. The US has the highest percentage of equity financing with 40 percent with China second at 15 percent. The latter incidentally has some blockchain companies with the best funding worldwide.
Finally, in terms of geographic location, the US has 40 percent equity financing. This is followed by China (15 percent), the United Kingdom (8 percent), Singapore (4 percent) and South Korea (3 percent). It turns out that Asia is a hotbed of start-ups, and China has several of the most well-funded blockchain companies in the world.
The Case of Bitmain
Bitmain came second in investor funding with financing of US$450 million. The company has been operating since 2013 with headquarters in Beijing, China. Bitmain has a reputation as the world’s largest designer of application-specific integrated circuit (ASIC) chips for bitcoin mining.
Recently, the company has been trying to list on the Hong Kong stock exchange. The only company with funding better than Bitmain is Coinbase. With the resurgence in Bitcoin value, the firm’s leadership could embark again on IPO plans as investor interest seems to be up again.
Incidentally, the leading investors in this field are blockchain-friendly companies. Investment companies like Digital Currency Group, Pantera and Polychain lead the list. These leading-edge technology accelerators and venture capital firms dominate new capital.
Digital currency group, for instance, invested early in blockchain technology. This year alone, the firm has invested over $60 million in the blockchain sector. Similarly, Boost VC has invested over in over 50 different blockchain companies in the past five years. In China, blockchain investors are also making a splash with the likes of Febushi Capital making significant inroads in recent times.
That said, the era of mega venture capital investments is uncertain to continue going forward. This is especially because of the decline of the ICO era. At the moment, tokens and cryptocurrencies don’t excite investors as they did in 2017. Moreover, regulatory crackdowns in many jurisdictions will likely hamper this sector going forward.
Nonetheless, trading volumes in Bitcoin and Ethereum have had a resurgence in the past few months. In addition to that, the entry of corporate giants like Facebook will add new dynamism to this industry. The Libra coin, for instance, seeks to provide stable currency for customers worldwide that don’t have access to banking. The future of venture capital in blockchain could very well have a lifeline going forward. Startups have a reason to be optimistic about going forward.