It’s no secret that the Bitcoin mining industry is under severe challenge following the fourth halving. As Bitcoin’s block subsidy has been reduced, hash prices (revenue per terahash) have reached historic lows. Meanwhile, post-halving enthusiasm for Menpur has waned, adding fuel to the fire for already nervous mine operators.
Nangeng Zhang, founder and CEO of Singapore-based Canaan Inc., developer of the first Bitcoin mining application-specific integrated circuit (ASIC), said: I spoke. bitcoin magazine The company sat down for its first interview with North American media to discuss the current state of the industry. Mr. Zhang commented on the origins of his mining of Bitcoin and offered his views on the landscape of chip design and trends in environmental sustainability.
Zhang also mentioned the rapid opportunities for Bitcoin in the Middle East and the convergence of Bitcoin and the artificial intelligence (AI) industry.
listen Watch the full audio interview with Canaan CEO Nangeng Zhang on the Bitcoin Magazine Podcast.click here Tune in.
Bitcoin mining open source core
Founded in 2013, Canaan revolutionized mining with the launch of the first AvalonMiner ASIC machine, marking a turning point in computational efficiency for those securing the Bitcoin network. As the industry moved away from traditional GPU- and CPU-based hashing, commercial-scale mining operations began to take shape with the adoption and commercialization of specialized ASIC hardware.
This step change by Canaan didn’t come out of the blue, but after the company open sourced both its Avalon hardware and management software, ASIC-based hashing became widely available. Chan said that embracing Bitcoin’s early open source movement was “not a decision,” but rather “a requirement for anyone wanting to join the blockchain community” and “a means to distribute computing power across the world.” He pointed out that. world. “
“The best way to defend against (the 51% attack) was to rapidly distribute ASIC-based computing to users around the world.” Zhang estimates that the democratization and large-scale adoption of ASICs will , 51% The risk of attack has decreased significantly. The open-source nature of Canaan’s chip designs subsequently led major companies such as China-based Bitmain and computing powerhouse Intel to develop their own versions of his ASIC machines.
Contrary to Moore’s Law (Bitcoin): Trends in Chip Efficiency
As an ASIC chip designer, Kanan has benefited from the semiconductor manufacturing boom over the past decade. At the heart of this progress is Moore’s Law, the observation that computational efficiency is doubling approximately every two years. Currently, companies such as Taiwan Semiconductor Corporation (TSMC), Samsung (SSLF), and Semiconductor Manufacturing International Corporation (SMIC) are ramping up efforts to optimize the production of 3-nanometer chips.
However, the transition to smaller semiconductor architectures is not without challenges. As chip sizes become smaller and smaller, i.e. transistor density increases on scales below 2 nanometers, quantum rather than classical effects are invoked. This regime shift can cause transistor malfunctions and deviations from Moore’s law.
The question is: Will Moore’s Law hold true, or will the classical computing boom turn into a quantum collapse?
Faced with the problem of these fundamental constraints in ASIC computation, Zhang says, “When we improved performance in the past, the cost per terahash went down. Now, this curve is flattening. , indicating that we are entering a new phase of technological advancement.”
“In fact, we are seeing a slowdown in the progress of process nodes, driving the adoption of new transistor technologies such as GA (gate array) and nanosheet technology along with backside power delivery. It will change the structure of (itself).”
“Bitcoin computing has appealed to pure digital logic, but is now moving closer to mixed-signal designs for analog implementations.” According to Zhang, this increased complexity is due to the This suggests the need for “Design Technology Collaborative Optimization (DTCC)” between designers and the foundries that manufacture the chips themselves.
Despite these challenges, Zhang believes AISC’s efficiency “will still continue to rise over the next three to five years,” and the company is introducing new products with each generation that “improve efficiency by more than 20%.” We plan to release at least one every year.
This efficiency increase was on display at the Bitcoin Asia Conference in Hong Kong on May 9th, where Kanan Next Generation A15 AvalonMinerIt boasts an efficiency of 18.5J/T compared to the conventional maximum of 20J/T. A14 model. Zhang said the A15 is specifically optimized for fluctuating environmental conditions.
Notably, Canaan has enabled overclocking capabilities on the A15, and Zhang poked fun at the common phrase buyers often say: “‘How can I get extra performance for free?!'” Unfortunately, that is not the case,” Zhang said. However, the added functionality promises to provide even more operational flexibility for A15 customers.
Decentralizing computing: Perspectives for the Middle East
Now more than ever, miners are seeking efficiency gains… *drum roll*… to reduce costs and increase revenue. This is no surprise, of course, as miners are turning to new technologies and geographies for cheaper power.
Mr. Zhang pointed to a strategic shift on Canaan’s part to respond to this change in the market, highlighting the company’s recent move to partner with mining companies in the Middle East region. “[The Middle East]is keen to invest in high-tech industries. These countries are particularly welcoming to Bitcoin and cryptocurrencies. The Middle East has great potential to become an important digital hub.”
On the topic of regulation in the Middle East region, Zhang noted that the region is “rapidly progressing in establishing a complementary regulatory framework for mining.” So a company like Zero Two, backed by Abu Dhabi’s sovereign wealth fund, big progress Integrating Bitcoin mining and its waste heat for the purpose of seawater desalination.
Heat Check: Mining Sustainability Trends
Since Canaan’s IPO on NASDAQ in 2019, the Bitcoin market and with it Bitcoin mining companies have been on fire. Publicly traded mega-companies like Marathon Digital Holdings (NASDAQ: MARA) and Riot Platforms (NASDAQ: RIOT) have become household names in his 2020-2022 bull market as Bitcoin enters the mainstream. I did.
But with increased visibility comes increased scrutiny from environmental groups, particularly the reckless “Change the Code” campaign funded by Ripple and led by Greenpeace USA.
When asked about environmental criticism of the mining industry, Zhang appeared to be open to discussion on the sustainability of the mining sector. “The perception that Bitcoin mining is not environmentally friendly is changing…Bitcoin mining can help develop the renewable energy industry.”
In particular, Canaan CEO praised heat recovery as perhaps the biggest trend yet to be deployed in both residential and commercial applications. “We started mining heat recovery products this year. I think in the next few years we’ll see a lot of great products that harness the heat from the mines. We can now produce near-boiling water from mining operations. ” He believes this trend underlies the sustainable nature of the mining industry and the general trend towards heat monetization across the mining industry.
Mr. Zhang also emphasized that the hydropower industry often suffers from a mismatch between supply and demand, and that mining is an important sector that can promote the introduction of renewable energy.
Instead of battery storage, Zhang said, “[Bitcoin mining]allows us to run these facilities at full capacity most of the time. This reduces the payback period to about five to 10 years. That means you can develop the same amount of capital. twice as much Hydroelectric power plants within the same period… The same principle applies to other renewable energy resources such as solar and wind energy that are driven by purely economic factors. ”
He believes that the mining industry will continue its trend toward low-carbon energy resources, and that the market dynamics driving the pursuit of low-cost energy will allow the mining industry to “automatically balance the balance between environmental protection, economic efficiency, and development.” He expressed optimism that the results indicate that “we can achieve this goal.”
Combining AI and Bitcoin: Developing and expanding energy assets
Bitcoin miners are typically power market pioneers, clustering in locations where power is abundant and demand is low. The symbiotic relationship between untapped energy resources and the inherently flexible and mobile network of Bitcoin miners has led ASIC-based computation to exploit resources at the edge of the grid. However, according to Zhang, this is not the end of the story.
He sees a new relationship forming between AI data centers and Bitcoin miners, each looking for the lowest-cost energy input. Zhang focused on “major players” and “early investors” who are beginning to realize the potential of integrating Bitcoin mining and AI computation.
“In this context, Bitcoin mining could serve as the first occupant of this (stuck) energy and (generate) economic benefits before AI computing power is fully online. This is what we have seen over the past six months.”
Zhang also expects that even after the AI facility is operational, the AI high-performance data center and Bitcoin mining will be co-located. “Given the redundancy requirements (25-30%) of power redundancy for large AI computing centers…Bitcoin mining is possible with redundant power supplies and Turn it off.”
conclusion
Zero-sum mining, as always, remains its own worst enemy. Coupled with the fourth halving, reduced margins, and the next wave of ASIC efficiency, it’s fair to say that collecting profits from mining could become as easy as squeezing blood out of a (digital) rock. It is no exaggeration.
But on the other hand, positive trends are emerging in the industry, and Canaan’s CEO believes opportunities abound for enterprising mining and ASIC companies looking to carve a path on the frontiers of energy and artificial intelligence. I’m looking at it.
