Bitcoin – Bitmain in turmoil?

Bitcoin - Bitmain in turmoil?

Is the American embargo on advanced semiconductors bad for Bitmain, the world’s first manufacturer of ASICs?

The Flea War

China and the United States have been engaged in a trade war for years, which turned into a technology war on October 7. The Middle Kingdom will soon lose its access to the latest generation semiconductors.

American engineers were asked to end all cooperation with Chinese industry or risk losing their nationality. Intel will cease its exports, as will ASML of the Netherlands. We reported last Tuesday:

“ASML (Advanced Semiconductor Materials Lithography) is the only company in the world that builds lithography machines in the extreme ultraviolet necessary for the manufacture of the best semiconductors (5 nm and less). »

Due to the fine grinding of these engines it is possible to increase the density of transistors per unit, which will reduce the energy consumption and therefore the necessary cooling of the components.

All this to remind us that transistor technology is vital to the bitcoin mining industry, which has electricity as the major part of its production costs.

Hence the questions about Bitmain, a Chinese company with production lines in Malaysia, Thailand and Indonesia. Antminer is said to have ceased production. Information to take with tweezers:

“I am told that ASIC manufacturer Bitmain has ceased production (postponed)”

No S19 XP for Christmas?

Bitmain is currently producing S19 XP Antminers with a 5nm chip made by Taiwanese TSMC.

These machines will provide 140 TH/s for a power of 3,010 Watts. That is an energy efficiency of 21.5 J/TH.

That’s a 40% improvement on its previous flagship, the Antminer S19 Pro, which produces 110 TH/s for 3,250 Watts.

Let’s imagine for a moment that the new Antminer S19 XP costs $20,000. And that the price of BTC goes back to 68,000 dollars. Well, because of its power 140 Th / s, 3010 W, and five cents per Kilowatt price, this ASIC would receive almost $53 per day. It would pay for itself after about a year.

However, with Bitcoin hovering around $20,000, the current returns of the various models are instead these:

“S19 Son sold for $10,000 a year ago only gets $3-3.50 a day with 5¢/kWh power.
It takes 2,857 days to earn $10,000 with such a profit of $3.50 per day. »

But what about the S19 XP if TSMC stops supplying 5 nm chips?

For Ben Gagnon, a miner at Bitfarms, the “production is planned 12 to 18 months in advance, even 24 months”. In other words, the US embargo probably won’t be felt for many months among minors. The first batches of S19 XP are expected to ship in January 2023.

Beginning of the end for Bitmain?

According to experts, China is four or five years behind the leaders in the semiconductor industry.

However, Bitmain is at the forefront of building ASICs specific to bitcoin mining. The S19 Pro (“7 nm chip”) is already much more efficient than any competitor.

This is good since the Chinese company SMIC would master the technology in 7 nm (no need for extreme ultraviolet lithography). However, production in 7 nm has not yet started due to its still prohibitive cost.

It should also be noted that each manufacturer determines the physical definition of this engraving smoothness. Engraved in “7 nm” by Intel is better than 7 nm by TSMC or Samsung.

What Michael Saylor said during the Bitcoin Mining Council’s quarterly report presentation:

“Political stress, like China imposing a moratorium on bitcoin mining, is a strong incentive for miners to decentralize. And like energy stress, technological stress will simply cause more decentralization. Bitcoin is extremely anti-vulnerable. »

In fact, the embargo risks doing business for Intel, which is trying to catch up with Bitmain. So, much better for Bitcoin decentralization

And during the time, the Hashrate chained the records

On October 10, the “difficulty” of bitcoin rose 13.6%. We haven’t seen such a rise since May 2021.

We are talking here about the difficulty miners have in finding new blocks. It increases when more machines come online.

The difficulty adjustment is done every 12 days or so (each 2016 block) to ensure you have a block every ten minutes or so. An additional 3% adjustment was made to this difficulty last Sunday.

This adjustment stabilizes the creation of new bitcoins as a reward for miners. It is currently 6.25 BTC per block, an inflation rate of 1.8% per year.

Currently, the value of the hash provided by miners has fallen below $0.07 per Th. A new low that put many miners under pressure. The five largest US miner stocks are down nearly 90% since ATH…

That said, NYDIG points out that the “The break-even point of professional miners is well below the current price of bitcoin.” “The Antminer S19 XP will remain profitable even if bitcoin falls to $8,000 per bitcoin [en assumant 5 centimes KWh] “.

The American miners are so happy they went to these S19 XPs despite the bear market. Did anyone know about this technology embargo that will most likely lead to a shortage of Oldtimers?

This would explain some huge investments despite the bear market. Marathon, for example, connected 25,000 S19 Pros last month…

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Nicolas Teterel avatar
Nicolas Teterel

Journalist reporting on the Bitcoin revolution. My papers deal with bitcoin through geopolitical, economic and libertarian prisms.

chute bitcoins

Bitcoin: 3 points to watch this week!

Online searches containing the word "Web3" increase and interest in bitcoin decreases: Google Trends

Online searches containing the word “Web3” increase and interest in bitcoin decreases: Google Trends