Crypto mining as an industry has gained significant traction in recent times, thanks to the frenzy seen in the crypto markets in the past few months. The technology behind these chips is also undergoing rapid changes with a focus on reducing the electrical energy consumption for every coin that is mined. On the sidelines, huge tracts of land are also being bought by different businesses across the globe to host data centers supporting the crypto mining activity. People engaged in crypto mining as well as companies making the chips are making merry while investors battle it out in the crypto markets that are experiencing significant volatility, particularly in the preceding few months. Bitmain Technologies, a Chinese firm earned revenues bordering $2.3 billion from chip sales during the last year. That represents only a fraction of the market size and there are other players like Nvidia, AMD, and TSMC. Shares of all these three companies have seen impressive gains closer to the 80% mark.
Crypto mining
Crypto mining is a very profitable enterprise within the crypto space for those who have the know-how to find cheap electricity and run a healthy business. The ecosystem has been rapidly changing and manufacturers of GPU or Graphic processing units and ASIC or Application specific integrated circuits have been experiencing healthy bottom line sans the jitters posed by the volatility in the crypto markets. From the earliest days of Bitcoin to this date, the hottest sector within the crypto markets has been churning out complex math puzzles to identify blocks and this phenomenon is unlikely to change any time soon. An example of this is that the 16 nm mining chip which had remained the industry standard has given way to 12 and 10 nm chips with 7nm chips expected in the coming months. Global market size for these chips is now in the neighborhood of $400 billion and expected to grow at a steady pace given the large number of cryptos being introduced to the market at regular intervals.
China leads the pack in crypto mining
China has remained in the forefront of crypto mining and Bitmain technologies for long, has been delivering large numbers of ASIC rigs with 28nm and 16 nm semiconductors. A recent report in Digitimes, China shows that Bitmain had recently ordered as many as 100,000 12nm chips from Taiwan Semi Conductor Manufacturing Company and the order was classified as ‘urgent’. Bitmain is also the second largest mining firm in China with Hisilicon occupying the top spot.
Canaan is another important Chinese player in the crypto mining space. This company has been engaged in developing 7nm chip designs with plans for a foray into the AI markets via semiconductor hardware custom-designed for specific applications.
Bitfury continues presence in crypto mining
Bitfury, the blockchain company that started in 2011 stated that the company is generating annual revenues of $100 million. However, the company also reported that ‘mining company’ is not the most appropriate reference to describe its activities anymore. However, its involvement with the mining industry continues though its mining pool no more captures any significant hashrate compared to its earlier days. Presently, it captures just about 1.7% of the processing power of its network. According to the website of the company it also sells a mobile unit for bitcoin mining in the name of “Blockbox” and also custom made 16nm semiconductor chips. There has been no indication of the company designing semiconductors that are smaller than 16nm. Bitfury has also branched off its businesses in several directions including ideas like mining bitcoin with lightbulbs and services for blockchain surveillance. But, the company simultaneously also claims that, it is building one of the biggest mining operations in North America
More competition in the pipeline
Competition is catching with some of the earliest players in the crypto mining industry and some of them are even bringing superior technology. GMO Internet, a Japanese company for instance has announced recently that it has successfully completed 12nm FFC semiconductor chips. They further claim that success with the 12nm chip has taken them closer to the process for mining 7nm chips. The DNM group, another Japanese company is also making waves in the crypto mining space. According to the company, it has commenced operations with its own mining and has plans for a “crypto mining lab” to research and develop ‘the highest hash power per unit’ using custom in-house machines. Another potential entrant is Samsung, the renowned Korean mobile giant who is slated to join the semiconductor and hardware market for crypto mining. It is also reported that Samsung’s foundry is engaged in manufacturing 10nm chips for ASIC and GPU devices.
Future of crypto mining industry
The future of the crypto mining industry appears very promising, particularly given the fact the population in the cryptocurrency market has already crossed 1400 and more are in the offing. Yet, not everyone who entered the fray has been successful. Hashfast, Cointerra, Butterfly Labs and Vmc are among the earlier companies struggling to get their foot into the fast track. But, the revenues and funding received by the industry in recent times present them with a competitive edge until newcomers succeed in making inroads.
