Chinese Bitcoin Miner Might Be Trying To Corner ASIC Chip Market

Bitmain, which specializes in custom mining chips and miners, has come under increased scrutiny due to the Chinese firm’s control over the production of so much bitcoin hardware and hashing power. Some bitcoin participants are beginning to fear a negative outcome for bitcoin with so few producers of the digital currency’s mining hardware.

In 2013, company’s like Black Arrow Software, Cointerra, Hashfast, Vmc, Kncminer and others offered different hardware miner models. Today, the competition for consumer-grade mining hardware has largely dwindled to two companies: Canaan and Bitmain.

The-Beijing based Bitmain announced Tuesday the launch of its new Antminer T9, which features fewer ASIC chips and increased power consumption over the hardware provider’s prior models, leaving questions as to how they’ve made their overall system more efficient.

Also Read: Why Bitcoin is Close to a Record Breaking 3 Exahashes of Processing Power

ASIC Chips a Threat To Decentralization?

Bitmain’s T9 represents a decrease in the number of hashing chips in the unit over its predecessor, the S9, which had 189 of the company’s BM1387 chips. The new T9 carries just 171. The power draw, 1400 Watts, represents an increase over the S9, as well, which drew about 1350 watts.

ASIC (short for ‘application-specific integrated circuit’) is a microchip designed for special applications.

Due to the nature of bitcoin mining technology, the efficiency of Bitmain’s ASIC chips is considered the most important aspect of the company’s mining ‘rigs’. Bitcoiners on social media have lots of questions about the company’s plans for its ASIC chips.

“Bitmain has emerged as a major threat to the decentralization of Bitcoin,” suggests ‘moral_agent‘ on Reddit. “They control too much of the production of mining hardware. They control too much of the hashpower.” Some wonder if a lack of competition has harmed the quality of machines available. Bitcoin mining insiders have heretofore wondered about Chinese spending on bitcoin mining.

“We have tried to calculate the amount of money that the Chinese have invested in mining, we estimate it to be in the hundreds of millions of dollars,” CEO of now defunct Kncminer, Sam Cole, said. “Even with free electricity we cannot see how they will ever get this money back. Either they don’t know what they are doing, but that is not very likely at this scale, or they have some secret advantage that we don’t know about.”

The technology with which Bitmain works, to be sure, is complicated. “Producing the latest BM1387 chip based on a 16nm process node has been more technologically challenging for our engineering team than any of the previous chips had been,” Bitmain Head of Marketing Nishant Sharma told Bitcoin.com in a previous conversation. 

Bitmain have increased efficiency as such, that they can use fewer chips and still reach a higher hash rate. Perhaps, the Beijing mining hardware company discovered ways to increase power to their chips without ruining them. Perhaps they’ve also managed to have the chips deliver results with less faults and/or developed a better cooling system capable of handling higher clock frequencies. If each chip is better tuned, and can handle more power, perhaps it is not that strange T9 consumes more power with fewer chips – a fact many commenters online have questioned. [We’ve reached out to Bitmain for additional comments, Editor’s note.]

T9

Earlier models than Bitmain’s T9, such as S7 and S9, have been credited with providing the Bitcoin blockchain with much of its processing power.

The T9, with 11.5 terahashes per second and the BM1387 chip available in preceding models, resembles greatly the S9, but with a lower power efficiency. It is also less expensive than the S9.

According to social media reports, before the T9 came to market, Bitmain had not sold an Antminer in at least a couple of months. Interested parties were left searching eBay and Amazon for mining equipment.

Bitmain released January 13 the fifth and sixth batches of its smaller miner, the Antminer R4; at 7.5TH/s and 8.7TH/s, respectively. The company is known as one of the few companies which regularly launches new mining products.

State of Mining Equipment

Thanks to an arm’s race of Bitcoin mining equipment, new Avalon and Antminer models always attract much attention.

Mining company Canaan’s most recent model is the Avalon720. The preceding Avalon 6 and 7 are considered functional pieces of bitcoin mining hardware, and to have contributed a significant amount of hashing power to the bitcoin network, but not as much as Bitmain.

Bitfury may have engineered the next best thing to Bitmain, say some, and also design their own hardware. But the North Carolina company does not sell mining rigs to the general public. Rather, besides mining Bitcoin it leases hash rate and offers “blockchain services”.

This leaves relatively few hardware options, perhaps, for those interested in Bitcoin mining compared to how the market looked just two years ago, when there were several mining hardware manufacturers to choose from.

What do you think about the state of bitcoin mining hardware in 2017? Will we see another contender enter the space in 2017? Let us know in the comments below.

Images courtesy of Bitmain, Canaan.io

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