Bitcoin

Lack of Bitmain Innovation May Lead to Decentralization

For years, centralization of Bitcoin mining has been a fear among network participants. Die-hard bitcoin evangelists and capitalist day traders alike agree that one entity controlling the hash rate could spell catastrophe for Bitcoin and for the cryptocurrency space as a whole, completely undermining the underlying principles described in the Bitcoin whitepaper and completely destabilizing the market and price action as well.

Bitmain, the world’s largest manufacturer of specialized ASIC Bitcoin mining equipment, is often accused and suspected of having a disproportionately high level of influence over the hash rate due to the giant mining pools like BTC.com and Antpool which are under its control.

A report in July indicated that Bitmain actually already controlled 42% percent of the hash rate, a stunningly high figure with BTC.com controlling 2.5% and Antpool controlling 16.5%.

An entity in control of 51% of the hash rate or higher would essentially have free reign over the network, being able to reject or accept transactions at will and carry out 51% attacks, whipping money out of thin air to become rich at the expense of the integrity of the network.

A successful 51% attack on Bitcoin would make the attackers incredibly wealthy while also catastrophically impacting the price of Bitcoin, perhaps permanently, due to the loss of trust in the network. While Bitmain are getting incredibly wealthy simply by manufacturing effective mining equipment, there is arguably an incentive for the company to attack Bitcoin simply to strengthen the Bitcoin Cash project, although CEO Jihan Wu has never given an indication that he would be interested in doing that.

For many, 42% is far too high for one company to control, and there are theories that Bitmain secretly controls other pools as well.

However, the 42% seen in July has actually dropped significantly instead of increasing as expected. 

As you can see from today’s report from Coin Dance, BTC.com now controls 15.2% and Antpool controls 13.9%, a total of 29.1%.

Why the sudden drop? The answer may lie in the recent lack of innovation seen in Bitmain products coupled with the increasingly more effective hardware released by other companies finally starting to break Bitmain’s ominous monopoly on the largest cryptocurrency network in the world.

We covered the various mining companies and hardware options in our recent article “Mining Wars,” which showed that Halong and other companies are doing great work catching up and surpassing Bitmain’s performance. but what has Bitmain been up to?

Adamant Capital founder Tuur Demeester describes the breaking of the monopoly as the “Commoditization of Bitcoin,” and agrees that the threat to the network is significantly lower with Bitmain operating on a more level playing field.

Demeester cites a recent twitter thread posted by Blockstream’s Samson Mow, someone in indirect competition with Bitmain due to the company’s support for Bitcoin Cash over Bitcoin. Mow frequently posts critiques of Bitmain’s progress and activities, but this time there may be some substance to what he’s saying.

Bitmain’s New Release a Letdown?

Mow used to work as COO for BTCC crypto exchange before heading up Blockstream, and while he is enormously biased when it comes to discussing Bitmain, it’s safe to say that he knows his Bitcoin mining.

“Let’s take a closer look at Bitmain’s announcement at WDMS Mining Conference for their “next gen” 7nm ASIC chips. To most people this may seem like a big deal and good news, but actually the announcement shows things aren’t looking too good for Bitmain.”

  • Mow states that the announcement is vague and fails to mention when exactly the new next-gen chip miners will be released for public sale, which is true.
  • The announcement also states that the 7nm chip will include over a billion trannsisters. Mow says that the statement is deliberately misleading, stating that chip with a billion transistors “sounds impressive to people outside the industry, but it’s not.” It’s like saying “the car will have 4 wheels,” according to Mow, and 8nm or 10nm chips could eqally have a billion transistors.
  • The next bone Mow has to pick with Bitmain is the “lab testing” statement. Bitmain reports results of 32J/TH energy efficiency in lab testing – however, as Mow points out, lab testing always demonstrates the peak performance in ideal lab conditions which are nearly impossible to replicate outside of the manufacturer’s laboratory, making this an inflated figure which does not reflect the energy efficiency which will be experienced by Bitmain customers, as the average efficiency rating is still unknown.
  • It’s also worth pointing out that these are the results for the chip itself, not an entire bitcoin miner – it is unclear how relevant the results be if at all once the chip is tested inside an actual ASIC miner.
  • Mow also mentions that the S9’s chip was initially marketed as having an energy efficiency rating of 75J/TH. In real world situations, the S9 runs at around 98J/TH, or about 30% higher power consumption than reported in the lab. “So it’s likely the new Bitmain miner with 7nm chips runs at 55J/TH at best.”
  • Mow compares the Bitmain announcement, which explained that a new chip had been made for release “soon” along with lab test results outside of a miner, to the launch of the WhatsMiner M10 which had a live miner demo with real stats not measured in lab conditions.
  • Finally, Mow points out that the WhatsMiner uses a 16nm ASIC chip which can be manufactured at half the cost of a 7nmchip, and speculates that even if the 7nm launch results in a good quality miner, the cost may be too high for it to be a feasiboe solution for many miners.

This is all rather incredible sounding given the huge monopoly Bitmain has historically had on Bitcoin mining. Could it be that the tables are beginning to turn and other competitors will begin to snap up larger tracts of the has rate?

Apart from the usual concerns associated with capitalist monopolies, the healthy competition from other miners should indeed prove to bring Bitcoin mining back from the brink of total vulnerability and into a more manageable zone of free market competition and decentralization.

Crypto Is Coming!

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The Raven’s Dispatch – Aug 23, 2018 – Is Mass Detokenization On The Way?

The “tokenization of everything” hits a speed bump

“TOKENIZE THE WORLD” was the ICO battle cry of 2017 and the subsequent drive to democratize art, real estate, cars, securities, and more, has enabled people to buy a token representing the value of any asset you can care to imagine.

So why are we talking about detokenization? The Digipulse CEO recently announced that 98% of all tokens connected to the project would be burned because the issued tokens are being used for speculative investment and not the built in platform. This is an issue for MANY tokenized projects. Will other companies follow suit? Read our entire piece Is Mass Detokenization On The Way.

The overall cryptocurrency market was rather stable this week floating between $205bln to $207bln representing a 1% increase, with an obvious pump and dump yesterday. Fun times ya’ll. But look closer and you will note the top 5 struggled, being held up by the King, Bitcoin.

Livecoinwatch

Bitcoin (BTC): Crypto twitter was all over the place this week. $3k Targets, $11 targets, people capitulating, etc. Very entertaining. Week to week price action found a channel between $6,300 and $6,500, then pumped to $6,680 and subsequently dumped back to $6,400. Not taking into account the PnD Bitcoin experienced 1.5% growth.

Ethereum (ETH): There’s been little love for Ethereum this month. Down 45% since July 24th, there doesn’t seem to be any reprieve in sight for Vitalik’s love child. ETH currently sits at $274 as of this post experiencing a decline of 6% week to week. Curse you ICOs!!

Project of the week QUIZANDO (QUIZ): Social platforms have provided creative people with a soapbox in which to spread their views, opinions, likes and dislikes across the world. To make any revenue from the audiences they need to work hard at getting endorsement deals, look for related affiliates and constantly promote products.

This is where Quizando comes in. The Quizando project is a state-of-the-art quiz delivery system enabling players to participate in a gaming ecosystem that rewards them with cash prizes. Quizando wants to help influencers monitize their influence easily and without the need to be a business expert or turning their channels into a constant adverts.

Want to learn more? Check out our feature on What is Quizando, and learn how you can put your Quiz knowledge to work for you. Intelligence Pays! Sponsored Content.

WHAT’S NEW AT CRYPTO IS COMING

What Is Quizando? – The Quizando project is a state-of-the-art quiz delivery system enabling players to participate in a gaming ecosystem that rewards them with cash prizes. Are you a quiz master?

What is ChromaWay and Are Hybrid Database The Future? – ChromaWay is a Swedish blockchain startup that has been working on secret blockchain related research and projects since 2011.

Is Mass Detokenization On The Way? – For the last while, the “tokenization of everything” has been a constant theme in crpytocurrency, and it’s had people justifiably excited. So why are projects bruning their tokens?

Blockchain company Seven Stars Cloud Group signs exclusive $24b deal with China’s Largest Electric Bus Operator – A groundbreaking $24 billion deal between China’s largest electric bus operator (NTS) and Seven Stars Cloud Group (Nasdaq:SSC) was recently signed which will create financing products through SSC’s blockchain ecosystem.

What is Neon Exchange (NEX) – NEX is a platform for payment services and decentralized crypto trade. NEX aims to combine the performance of centralized exchanges with the trust and security features of decentralized exchanges

Blockchain Law Study group Formed in South Korea – In South Korea, lawmakers, industrial experts and judges are teaming up to form a fresh working group which will endeavor to discuss and propose solutions for issues surrounding the blockchain technology.

South Korea Still Unsure on How To Handle Cryptocurrencies – South Korea just held a session of its National Assembly with the sole purpose of discussing blockchain adoption and ICOs guidelines.

Ever Wonder Why Governments Tend to Bully Cryptocurrencies? – Stop picking on crypto, you bullies!

Bitmain Expansion: Multi Billion IPO on the Horizon – Cryptomining giant Bitmain is about to go public in what could be one of the biggest Initial Public Offerrings ever.

Kuwait Finance House Becomes First Bank Using Blockchain in The Country – The Kuwait Finance House (KFH) has confirmed it completed a cross-border transaction with the use of Ripple technology.

Hacker ordered by Federal Court to pay the bail in cryptocurrency – Cryptocurrencies are getting steady acceptance in judicial quarters. In a recent case, a Federal judge allowed an accused hacker to pay bail amount in cryptocurrency.

CRYPTOCURRENCY NEWS FROM AROUND THE INTERNET

SEC Denies Nine More Bitcoin ETFs – Please, we all knew this was gonna happen. The U.S. Securities and Exchange Commission (SEC) on Wednesday rejected applications for nine bitcoin-based exchange-traded funds (ETF) from three separate companies.

China shuts down blockchain news accounts, bans hotels in Beijing from hosting cryptocurrency events – The two incidents are the latest instances of China’s continuing crackdown on cryptocurrencies, which began last September with bans on local exchanges and ICOs.

AppleJeus: macOS users targeted in new Lazarus attacks – Researchers have uncovered a new campaign by the infamous Lazarus group which targets cryptocurrency exchanges in order to spread malware to Windows and macOS users.

Half Of The Remaining Non-Minted Bitcoin Supply Is ‘Spoken For…’ – The CoinShares team analyzed data from an ING survey and found that there are 99 million people who intend to own Bitcoin but don’t yet.

90% of Employees at Major Crypto Exchange Binance Receive Salary in BNB – At the Liechtenstein Cryptoassets Exchange (LCX), Binance CEO Changpeng Zhao told TechCrunch founder Michael Arrington that 90 percent of the exchange’s employees receive their salaries in BNB.

‘Bitcoin Jesus’ Is Having a Hard Time Winning Over True Believers – Roger Ver, the virtual currency advocate often referred to as Bitcoin Jesus, is finding it tough to win converts to the supposed second coming of the the world’s biggest cryptocurrency.

Big Investors Deny Involvement In Crypto Miner Bitmain’s Pre-IPO Funding –  SAY WHAT?! Tencent Holdings and SoftBank Group are both disputing their involvement in a widely reported pre-IPO investment round for Chinese cryptocurrency mining giant Bitmain.

SoftBank Denies Reports of Bitmain Deal; Bitmain Still Silent – Hmmm this is not looking good for Bitmain. Japanese telecom giant SoftBank has denied media reports of its involvement in a pre-IPO funding round of bitcoin mining rig manufacturer Bitmain.

Here’s How You Can Validate An ICO Using Your Chrome Browser – Cryptocurrency and blockchain is a world filled with excitement and new technology, but like your Mother always warned, if something seems too good to be true then it probably is.

Wall Street’s Crypto Caution Risks Coinbase Gaining ‘Unassailable’ Position – Cryptocurrency trading revenue is primed to explode within the near future, and Wall Street is running out of time if it hopes to stop industry giant Coinbase from gaining an indomitable market position.

Nvidia is sliding after cutting its guidance and saying its crypto boom is over (NVDA) – Nvidia shares are down more than 4% Friday on trading after the chip maker cut its third-quarter revenue guidance and warned that it’s crypto business is going to zero.

Thanks for joining us this week. If you have something interesting you would like to submit reach out to us at info@cryptoiscoming.com. And don’t forget, Crypto is Coming!

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Bitmain Expansion: Multi Billion IPO on the Horizon

Cryptomining giant Bitmain is about to go public in what could be one of the biggest Initial Public Offerrings ever.

The company is filing for an IPO in September with a valuation possibly reaching as high as $18 billion and running at a market cap of $40 – $50 billion.

The IPO will be underwritten by ABC Capital Management and listed on the Hong Kong Stock Exchange in Q4 2018 or Q1 2019. Bitmain already closed a $1 billion pre-IPO financing round led by China International Capital Corporation on July 23 at a $15 billion valuation, double that of Coinbase’s $8 billion valuation.

The Pre ICO round also saw invesments from groups like Tencent Holdings, Ltd., Softbank Group, China National Gold Group and an unnamed sovereign wealth fund managing $15 billion in assets with a minimum investment of $5 million per group.

Prior to this, Sequoia Capital China led Bitmain’s $50 million Series A and $400 million Series B rounds. Sequoia Capital is a VC firm which got in early on ventures like Google and Apple, taking Binance to court over an alleged breach of contract earlier this year.

There are some major players lining up to provide the funding ready for Bitmain’s expansion into the public domain, and the IPO is set to be so big that it could even take the top spot from Facebook as the biggest IPO in the history of the world.

What then?

Expansion

Bitmain founder and CEO Jihan Wu spoke with Bloomberg in June describing a massive AI expansion as well as providing some information on what the company has been earning so far.

Wu said Bitmain booked $2.5 billion of revenue last year and that he and co-founder Micree Zhan together own about 60 percent of the business. While Bitmain has few direct comparables, applying a multiple similar to that of publicly traded chipmakers such as Nvidia Corp. and MediaTek Inc. would give the company a valuation of about $8.8 billion. That would make the co-founders’ holdings worth a combined $5.3 billion, according to the Bloomberg Billionaires Index.

Wu said that an IPO had advantages like allowing early investors such as Sequoia and IDG Capital to cash out.

While it’s too soon to say just how big Bitmain’s IPO will be, one of their main competitors (Canaan Inc) filed for a Hong Kong IPO slated for a $1 billion funding, and in 2017 Bitmain’s revenue was 12 times greater than Canaan’s.

The interview also points to the nature of Bimain’s plans:

“Both companies design custom chips known as application-specific integrated circuits, or ASICs. These are particularly good for the brute-force number crunching required by cryptocurrency miners, who verify virtual currency transactions and earn crypto-denominated rewards by solving complex math problems. ASICs are also useful for the heavy workloads associated with some forms of AI, such as machine learning.”

Wu has stated that AI will be a big part of their business going forward. In October, Bitmain began selling early prototypes of its Sophon BM1680. The ASIC chip, which is sold as part of a $600 accelerator card that you attach to a computer, is designed expressly to speed up machine learning.

Although it doesn’t do everything that high-end graphics cards made by the likes of Nvidia and Advanced Micro Devices Inc. do, it’s more powerful for some kinds of deep learning, and much cheaper. “We are just trying to do something that they cannot take care of well enough,” says Wu, who estimates that as much as 40 percent of Bitmain’s revenue will come from AI chips within five years.

Bitmain already released an AI chip called Sophon 3 months after a competing product from Google already launched – however, Google does not have a foothold in China which gives Bitmain a competetive home advantage.

How Much Could Bitmain Make?

It’s too soon to say – CoinDesk sensationally claimed that the IPO would be worth $18 billion while Bloomberg have published a more conservative $3 billion figure. Whatever the precise figure is, the cryptomining giant stands to make a lot of money enabling it to break into the AI market in an even bigger way. If it’s successful, that is.

Blockstream CSO Samson Mow took to Twitter to point out that valuations of around $14 billion were based off of net profit projects for 2018 in excess of $1.8 billion, stating his belief that the company was unlikely to clear that much profit due to the heavy losses sustained in Q2 and Q3 for miners everywhere, which leads in to the next question on whether the IPO can be pulled off.

Here’s the thing – just because the company is worth a lot of money doesn’t mean the IPO will take off and shares will sell like hot cakes.

Investors are wary of cryptocurrency and related companies at the moment with Bitcoin and co tumbling over 75% in value since January. Institutional investors simply aren’t used to dealing with that kind of volatility when it comes to billion dollar investments.

“I don’t think people will be too interested,” said Alex Wong, Hong Kong-based director of asset management at Ample Capital Ltd., in reference to share sales by crypto mining companies. “When the demand for Bitcoin diminishes, their revenue can drop very fast.”

However, if anyone can pull it off it’s Jihan Wu.

Say what you want about the guy, but he’s tenacious – despite only entering the crypto space in 2011, he has created a multi billion dollar company, totally dominated the global ASIC mining market and become a self made billionare in the space a few years.

The company was founded in 2013, with Wu favouring mining over forming an exchange because it came with less legal risks, something that turned out to be a pretty wise move.

In a way, the IPO may prove to be something of a tippping point for the cryptocurrency space as a whole – if Wu can convince institutional investors to support his company even in a bear market, the world will begin to see cryptocurrency as an increasingly legitimized area.

However, if the company fails to go public because no-one wants to touch crypto at the moment, the market could lose confidence and that could lead to an even worse decline than we’re seeing now. We’ll have to wait until September to see how it turns out.

The study further explored the development of blockchain technology in the country and found it to be in its earlier stages.

Remember folks, Crypto is comin!

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