Bitcoin Mining Hardware War Is Heating Up Ahead of the Halving - CoinDesk

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• Bitcoin Mining Hardware War Is Heating Up Ahead of the Halving - CoinDesk
• Bitcoin Mining Is 'Essential' Under Canada's COVID-19 Plan - CoinDesk
• Oil Companies Will Dominate BTC Mining in Five Years: Marty Bent - Cointelegraph

Bitcoin Mining Hardware War Is Heating Up Ahead of the Halving - CoinDesk Posted: 17 Apr 2020 01:21 AM PDT Shenzhen-based MicroBT is rolling out three top-of-the-line bitcoin miners amid heated competition with Bitmain ahead of the network's halving event in less than 30 days. Chen Jianbing, COO of MicroBT, announced in an online event on Friday that the three new models – the WhatsMiner M30S+, M30S++ and M31S+ – are available via both warehouse inventory and pre-orders that can be delivered in up to 30 days. The move underscores MicroBT's neck-and-neck competition in the multi-billion-dollar mining hardware market with major rival Bitmain, which is scheduled to deliver the first batch of its latest AntMiner S19 and S19 Pro miners in May. At the event, Chen reemphasized MicroBT's rapid growth in 2019, having achieved sales of 600,000 units of its WhatsMiner M20 series, which, as CoinDesk reported in February, has chipped away at Bitmain's longstanding market dominance. The COO said 2019 sales volume had also doubled compared with 2018, boosting its sold computing power to 35 million terahashes per second (TH/s). That accounted for 35 percent of the Bitcoin network's total hash rate as of the end of December. The new models add to MicroBT's existing M30 product line, which includes the previously launched WhatsMiner M30S and M31S. Efficiency war With the latest equipment from both major manufacturers soon to start shipping, the bitcoin mining hardware market is now entering what Chen called the "3X era," referring to a mining efficiency that's below 40 watts per terahash (W/T). For context, W/T measures how much electricity a mining machine consumes for each terahash of computing power. Since bitcoin mining is an energy-intensive computing process, a miner with a lower W/T ratio would be able to bring home a higher gross margin. This metric has become considerably more important given the upcoming bitcoin halving, which will reduce the amount of bitcoin earned by the mining industry in a day from around 1,800 to 900 units. Read more: Bitcoin Halving, Explained According to the firm's specifications, the M30S+ is able to compute at a 100 TH/s with 34 W/T efficiency, while the M30S++ can compute as much as 112 TH/s at 31 W/T. The previously launched M30S is claimed to deliver an efficiency of 38 W/T. Meanwhile, the M31S+ and the earlier M31S both deliver an efficiency of 42 W/T. However, Chen said the new model has the option to switch to a lower voltage mode in order to improve the efficiency to below 40 W/T. To put this into perspective, by Bitmain's specification, AntMiner S19 and S19 Pro machines are said to be able to compute at 95 TH/s and 110 TH/s with an efficiency of 34 W/T and 30 W/T, respectively. Tough times But arguably miner manufacturers are all facing a tough time selling equipment under current market conditions, with mining operations taking a step back to wait and see how bitcoin's price will play out after halving. Major manufacturers have had to mark down the prices of their mining equipment following bitcoin's price crash on March 12, the largest sell-off since 2013. Vincent Zhang, MicroBT's head of sales, said during the launch event the WhatsMiner M30S is now priced at $1,962 – down from around $2,500 when it was initially released. For the new models announced today, the M30S+ and M30S++ are priced at $2,740 and $3,899 per unit, respectively. Following the recent price cuts, manufacturers such as Bitmain have also had to partially refund customers who placed pre-orders at the higher price, a policy the firm has had in place for the past several years. Zhang said MicroBT is now also enforcing such a policy in its bid to keep customers happy. Users who have placed pre-orders at a higher price than the retail value at the time of delivery will be compensated for the difference, like with Bitmain, in cash coupons. These can only be redeemed at up to 10 percent of the value of additional goods purchased by MicroBT. Although MicroBT gained a large amount of market share in 2019, it had issues delivering devices on the timeline it had promised to customers, suffering up to several months of delays. Read more: Another Bitcoin Mining Firm Warns COVID-19 Pandemic May Harm Its Business Zhang said the firm will now compensate customers in cash coupons worth 0.3 percent of the value of a pre-ordered machine for each day a delivery is delayed beyond the promised date. Also notably, MicroBT will extend its warranty policy for the M30 series to one year post-delivery – longer than the industry's average six-month warranty period. Disclosure Read More The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Bitcoin Mining Is 'Essential' Under Canada's COVID-19 Plan - CoinDesk Posted: 17 Apr 2020 09:45 AM PDT The "Great Lockdown" is redrawing the bitcoin mining landscape as the economic crisis makes smaller operations less profitable and access to China's hardware supply chains crucial.  "Many miners are relying on the bitcoin price to increase post-halving in order to stay operationally profitable, and that's not an ideal situation for any business to operate in," said F2Pool business director Thomas Heller, leading one of Asia's largest bitcoin mining operations. "In early March, a number of miners had their bitcoin-backed loans liquidated, and other operators had to turn off their machines." It's hard to say which miners now face crippling debts because few privately owned mining operations court publicity. Among those with public records, the Canadian startup Hut 8 owes roughly $14 million to Genesis Global Capital, an affiliate of the American crypto giant Genesis Trading (which is owned by CoinDesk's parent company, Digital Currency Group).  Hut 8 CFO Jimmy Vaiopoulos said he is "comfortable with the debt level," adding the repayment deadline is in 2021 and he expects the bitcoin price to increase long before that. The loan has an annual interest rate of 9.85 percent. Read more: Bitcoin Halving, Explained Canadian mining operations such as Hut 8 have an advantage over some competitors abroad: They are deemed "essential services" under the federal government's COVID-19 strategy, according to Bitfarms co-founder Emiliano Grodzki. "This is the reason we can continue working," Grodzki said of his Canadian company, unlike mining farms in his homeland, Argentina, where miners aren't permitted to continue as usual. Plus, with regards to profitability, Vaiopoulos said Hut 8 aims to have updated equipment from Chinese hardware suppliers, which is more efficient than current models. "There were some delays in terms of equipment," Vaiopoulos said. "But we're kind of past that hump." However, over the past two months Hut 8 CEO Andrew Kiguel and board member Gerri Sinclair both resigned. During a public earnings call the first week of April, Kiguel said equipment timelines are still unclear, due to the ongoing pandemic. "The world is grappling right now with different supply chain issues like getting ventilators and masks around the world as opposed to bitcoin mining machines," Kiguel said during the call.  Read more: How Bitcoin's Price Slump Is Changing the Geography of Mining As such, many mining operations around the world are facing this same struggle. BitPatagonia co-founder Walter Salama in Argentina, whose mining farm is temporarily closed by the coronavirus lockdown, said the cost of new machines is his most pressing concern.  "Today the problem continues to be the high cost of machines that do not allow long-term planning," Salama said. "Moving operations is very expensive. Each country should have the privilege of having mining companies and contribute to the blockchain." He predicted "medium and small miners" could disappear as those who provide funds and hardware "concentrate on the larger ones" while "praying to Bitcoin" for a bull market. If this happens, Salma added, it would undercut "the fantasy of decentralization." This is why Vaiopoulos said Hut 8 applied for an Emergency Wage Subsidy from the Canadian government, an ongoing program to help companies that have lost more than 30 percent of their revenue since 2019 continue to pay salaries.  Policy implications It's clear governments have a significant impact on whether bitcoin mining can remain profitable in their respective jurisdictions. Generally speaking, mining operations require both cheap electricity and government leeway to stay competitive throughout volatile cycles. A longer political chilling effect took place in Iran from 2018 to the present. Iran was once home to a thriving bitcoin mining industry due, in part, to subsidized electricity. Then stricter government enforcement damped the domestic mining sector and made businesses even more vulnerable to supply chain disruptions.  Regions with robust mining companies, such as China and Russia, have supportive regulatory environments. Russia, in particular, is home to a state-owned power plant renting space to crypto miners. Read more: A Russian Nuclear Plant Is Renting Space to Energy-Hungry Bitcoin Miners If Salama manages to get and operate new hardware in Argentina before the halving in May, which will reduce miners' rewards by 50 percent, local operating costs will still impact his profitability. For example, Chinese miners are expected to get lots of cheap energy during the annual "wet season," July through September, thanks to national hydropower projects. The strength of local currencies is yet another important factor. Due to the volatile fiat exchange rate, subject to both the Great Lockdown and national policies, Grodzki said Bitfarms' operational expenses are now basically 10 percent cheaper. "Our revenue is in bitcoin, which [buyers] value in U.S. dollars. But our operational expenditures are in Canadian dollars," Grodzki said. Russia's mining industry witnessed a similar impact, where a decline in local currency value offset bitcoin's own volatility. Even if the price of bitcoin goes down in dollars, it may be up in rubles. Beyond Hut 8, volatility in both crypto and traditional currency markets may affect even more loans in the months to come. Bitfarms owes roughly $20 million to the New York-based Dominion Capital LLC. "We will study opportunities for low-cost electricity in other parts of the world, like Latin America," Grodzki said. "Miners in other parts of the world with [cheaper] electricity can sell their capacity. … We also expect to find another source of electricity cheaper than Canada."  David Pan contributed reporting. Disclosure Read More The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Oil Companies Will Dominate BTC Mining in Five Years: Marty Bent - Cointelegraph Posted: 15 Apr 2020 11:09 PM PDT Mining Bitcoin (BTC) has often been criticised for its exorbitant power usage, but podcaster Marty Bent has embraced a solution that he says actually reduces waste in the oil and gas (O&G) sector. In an April 15 blog post, Bent revealed that since last year he had been mining Bitcoin with the Great American Mining (GAM) company, using excess gas formed as a byproduct of mining oil to power the rigs.  GAM deployed their first small mining operation in the form of a shipping container in an oil field last December. Bent said it was the first step in encouraging O&G producers to become "some of the biggest miners within the Bitcoin network". He elaborated on the topic in a podcast: "What we're trying to do and achieve at Great American Mining is to sort of have these oil and gas companies have the 'aha' moment and realize that they should be investing in this and building out a mining infrastructure on their field so that they can be more efficient with their wasted gas... and overall in the long term, help Bitcoin out, help protect Bitcoin, and distribute Bitcoin further from a mining perspective." The concept Bitcoin miners are looking for cheap and abundant energy sources, while O&G companies  are looking to be as efficient and profitable as possible. GAM uses gas normally disposed of as a waste byproduct or sold off — sometimes at a loss — into a crypto mining energy source.  "If designed correctly, containers filled with Bitcoin miners have far superior uptime and are 5x more profitable (on average) than sending the gas to a pipeline to sell." Bent said there was no need to use warehouses or or build steel structures to mine Bitcoin when stacked ordinary shipping containers would do:  "You're seeing a trend now, where even centralized locations are adopting. Instead of building like a large warehouse and doing all the infrastructure, they're actually using the container model as the way to build on site.... a year or so ago, that wasn't the case at all. And now you're seeing very, very large places, you know, stack 40, 50, 60 containers... it's just cheaper to do it that way." The concept is becoming more popular. The Winklevoss Twins have invested in Crusoe Energy Systems, a Texas company that converts the waste from surplus natural gas to mine cryptocurrencies. Up in Canada oil mining company Black Pearl Resources are mining Bitcoin to help offset operational costs. Another Canadian company Upstream Data sells and rents mobile mining equipment to O&G producers for the same purpose. U.S. doesn't have much mining infrastructure At present, China is the go-to destination for industrial-scale cryptocurrency mining facilities. With its affordable energy costs the country accounts for approximately 60-70% of the energy consumption from mining worldwide.  As of today, the Bitcoin network has an estimated annual electricity consumption of 73.374 TWh. As mining has become more expensive over time, its energy consumption will most likely also increase, leading entrepreneurs to look for alternative solutions.  Bent said that he believed that Bitcoin mining needed to be further distributed geographically — China currently dominates mining of the cryptocurrency. He said mining Bitcoin was a huge economic opportunity for the U.S. Oil and Gas industry: "We are still very early in this game and on our personal journey at GAM, but we are confident that we will see this vision come to fruition over the course of the next five years. We could definitely fail (unless the government starts bailing out bitcoin miners), but we're sure as hell going to try."

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