There is no doubt that bitcoin mining is under extreme pressure following the fourth halves. As bitcoin block subsidy is slashed, the hash rate (revenues per terrahash), has hit historic lows. The post-halving frenzy of mempools has also waned. This is adding more fuel to an already stressed mining industry.
Nangeng Zhang is the founder and CEO of Singapore’s Canaan Inc. He created the first bitcoin-mining application-specific integrated chip (ASIC). Bitcoin Magazine The firm was granted its first ever interview by a North American publication to discuss the state of industry. Zhang discussed the history of bitcoin mining, and gave his opinion on chip design trends as well as environmental sustainability.
Zhang identified the burgeoning opportunity for Bitcoin to be used in the Middle East as well as convergence of the artificial intelligence and bitcoin industries.
Listen to the complete audio interview with Canaan Inc. CEO Nangeng Zhang. Bitcoin Magazine Podcast.
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Open Source Core of Bitcoin Mining
Canaan, founded in 2013, revolutionized mining with the launch of its first AvalonMiner ASIC machine – marking a turning point in computational efficiency for those securing the Bitcoin network. Commercial-scale mining began as the industry moved from GPU and CPU hashing to specialized ASIC equipment.
Canaan’s step-change did not happen in a vacuum. It led to an explosion of ASIC hashing, after it open-sourced its Avalon management software and hardware. Zhang pointed out this embrace open-source software. source The early movement of Bitcoin was “not a decision” Instead, “a requirement for anyone who wants to get involved in the blockchain community” The means “to decentralize computing power all over the world.”
“The best way to defend against [51% attacks], was to rapidly distribute ASIC-based computing to users worldwide”. According to Zhang, the threat of a 51 percent attack is greatly reduced due to ASICs’ widespread deployment and democratization. Open source software is a great way to get started. source Canaan’s design led other major companies, including Bitmain in China and Intel of the United States to develop their own chips. own ASIC Machines
Moore’s Law and the Future of Bitcoin
Canaan is a manufacturer of ASICs and has benefitted from the growth in semiconductor production over the past decade. At the heart of this progress lies Moore’s Law – an observation that computational efficiency has approximately doubled every 2 years. In this pursuit of optimization, companies such as Taiwan Semiconductor Corporation (TSMC), Samsung Semiconductor Limited (SSLF) and Semiconductor Manufacturer International Corporation (SMIC), are ramping-up towards the production of 3 nanometer chips.
The move to smaller and smaller architectures in semiconductors does not come without its challenges. The quantum effects are invoked by increasing transistor density in smaller chips. The transistors may malfunction due to this regime change, and Moore’s Law could diverge.
It is now a question of whether Moore’s Law will hold up, or if the classic computational boom has become a bust.
Zhang acknowledged that these constraints are fundamental to ASIC computing. “in the past, when we boosted performance, the cost per terrahash went down. Today, this curve has flattened. This indicates that technological advancements are entering a new phase.”
“We are indeed seeing a slowdown in the advancement of process nodes, promoting us to adopt new transistor technologies like GA (gate array) or nanosheet technologies along with backside power delivery. This is not just making the surface smaller, but changing the structure of the circuit [itself].”
“Bitcoin computing appeals to a purely digital logic, but today, we are moving closer to a mixed signal design for analog implementations.” According to Zhang, this increase in complexity suggests that the need for “design technology co-optimization (DTCC)” Canaan is a chip designer.
Zhang is confident that AISC will be able to meet its goals despite these obstacles. “still on the rise for the next 3-5 years” The company intends to launch at least one new product each year. “over 20% efficiency gains” per generation.
Canaan’s efficiency gains were on show at the Bitcoin Asia Conference in Hong Kong, on May 9, where Canaan introduced its next-generation A15 AvalonMinerThis new model boasts an efficiency of 18.5J/T compared to 20J/T for the predecessor A14 model. Zhang remarked that the A15 was particularly optimized to handle variable environments.
Zhang made fun of the buyers’ common remarks about overclocking in particular. “‘oh you can get extra performance for free?!'” Zhang admits that it’s not so, but the A15 customers will benefit from the additional capabilities.
Middle East Perspectives on Decentralizing Computation
Now, more than ever, miners are on the lookout for efficiency gains to… *drumroll*… reduce their costs and increase revenue. This is not unusual, but in the quest to find cheap power, miners have turned to different technologies and geographical areas.
Zhang said that Canaan has made a shift in its strategy to adapt to the changing market. He highlighted the recent decision of the company to form partnerships with mining companies in the Middle East. “[The Middle East] is eager to invest in high-tech industries. These countries are particularly welcoming to Bitcoin and cryptocurrency. The Middle East holds great promise to become a crucial digital hub.”
Zhang stated that Middle East regulation has been a problem for the Middle East. “quickly advanced in establishing complimentary regulatory frameworks for mining”. It follows that firms like Zero Two – backed by Abu Dhabi’s sovereign wealth fund – have made significant strides Integrate bitcoin mining with its waste heat to desalinate salt water.
Heat Check: Trends In Mining Sustainability
Canaan, a bitcoin mining company that went public on NASDAQ, has seen its market explode since 2019. After bitcoin became mainstream, publically traded mining companies like Marathon Digital Holdings Inc. and Riot Platforms Inc. were household names.
With the increase in visibility came an increased level of scrutiny by environmental groups, including the Ripple funded and poorly conceived Change the Code Campaign led Greenpeace USA.
Zhang was unfazed when asked to comment on environmental concerns about mining. He welcomed the discussion regarding sustainability within the mining industry. “Perceptions of bitcoin mining as environmentally unfriendly are changing… bitcoin mining can help to develop renewable energy industries.”
Canaan’s CEO has praised heat capture in residential and business applications as possibly the largest trend to date. “Mining heat recovery products have started this year. I think in a few years, I believe people will see many very impressive products that utilize heat from mining. Today, we can generate near-boiling water from mining operations.” He believes that this trend is the foundation of mining’s sustainability and an overall trend toward heat monetization.
Zhang also highlighted the hydropower sector, which is often plagued by a mismatch between supply and demand, as an area in which mining could boost renewable deployment.
Zhang proposes that battery storage is not necessary. “[bitcoin mining] can allow these facilities to operate at full capacity most of the time. This can reduce the payback period to about 5 to 10 years – that means the same amount of capital can develop twice as many hydro-stations in the same time frame… the same principle applies to other renewable energy resources like solar and wind energy driven purely by economic factors.”
He expressed confidence that market dynamics driving low-cost energy will show that “mining can automatically balance between environmentalism, economic efficiency and development.”
AI and Bitcoin convergence: developing and scaling energy assets
Bitcoin miners are usually pioneers on the energy markets. They flock to places where there is an abundance of power and low demand. ASIC computation has been used to create resources at the edge of grids because of the symbiotic relationships between the underdeveloped energy sources and bitcoin miners’ mobile and flexible network. Zhang says that this isn’t the end of it.
He believes that a relationship is forming between AI-based data centers and Bitcoin miners, each of whom are searching for low-cost inputs. Zhang made note of “major players” The following are some examples of how to get started: “early movers” There is a growing awareness of the integration potential between AI and bitcoin mining.
“In this context, bitcoin mining can serve as an initial occupant of this [stranded] energy, [generating] economic benefits before AI computing power fully comes online. This is what we have seen in the past 6 months.”
Zhang predicts that AI data centers will co-locate with bitcoin mining, even when AI is fully operational. “Given the redundancy requirements for large-scale AI computing centers (25-30%) of power redundancy… bitcoin mining can use the redundant power and shut off when [AI comes online].”
You can also read our conclusion.
It is still the same: The mining industry continues to operate on a zero-sum basis. own worst enemy. A reduction in margins and the next It would not be unfair to suggest that mining profits could be made as easily as squeeze blood from (digital rock).
But, on the margin, positive trends are taking place in the industry – and the Canaan CEO sees opportunities abound for enterprising mining and ASIC firms willing to blaze a trail on the energy and artificial intelligence frontiers.
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Source: bitcoinmagazine.com