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Analyst: Crypto Mining Giant Bitmain Losing Its Edge As Demand Dwindles

Chinese tech conglomerate Bitmain has been the dominant force in crypto mining for the past year. However according to analysts at Sanford C Bernstein & Co. it may be losing its edge as rival firms enter the market and demand dwindles as markets continue to decline.

In a report by the SCMP it was suggested that the company may have to write down the value of its inventory. According to the analysts the company which produces the chips designed by Bitmain, Taiwan Semiconductor Manufacturing Co (TSMC), should ask the firm to make full prepayments and refrain from adding capacity solely for cryptocurrency-related demand.

Bitmain currently controls 85% of the market for crypto mining hardware and has a planned a multi-billion dollar IPO in the near future. However the firm is facing growing competition from rivals such as Canaan and Ebang International Holdings, which are also working on Hong Kong IPOs. In recent days a number of companies and investors have denied participating in Bitmain’s fund raising efforts earlier this year.

Following a crypto market decline of over 70% this year demand for mining hardware has also fallen. As a result speculation regarding Bitmain’s finances has risen and unverified investor documents regarding its business have appeared online. This has prompted concern over the company’s resilience to tumbling cryptocurrency prices.

According to Mark Li at Bernstein “Bitmain has likely been acquiring large amounts of Bitcoin Cash, posing a “major risk” as the bitcoin offshoot’s value declines.” BCH has lost almost 70% since its early May price of $1,730 according to coinmarketcap.com. Bitcoin conversely has only dropped around 30% in the same period.

Regardless, the company has made a fortune in the past year to the tune of $3 to $4 billion according to Bernstein. Its ASICs hardware still dominates the top mining pools making Bitcoin extremely Bitmain reliant, the closest it gets to centralization. According to Trustnodes it almost achieved 51% of the hashrate in June as BTC.com and Antpool, both owned by Bitmain, approached the critical level.

If markets continue to fall companies that profit from them will undoubtedly lose their edge. However crypto is still in its infancy and a market recovery in 2019 could see Bitmain and other crypto focused companies flying high once again.

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Bitmain Discloses Shipping and Mining Policies for a ‘Fair and Transparent Ecosystem’

Chinese mining hardware giant Bitmain, one of the leading Bitcoin (BTC) mining firms worldwide, announced its policies for mining practices, according to an official blogpost July 25.

The recent list of policies intend to show Bitmain’s commitment to providing a “fair and transparent cryptocurrency ecosystem” in terms of policies for mining hardware shipping as well as those of mining practices.

Regarding shipping, Bitmain proposed four major measures including order quantity restriction, establishment of a “first-paid-first-ship” order of fulfillment, combatting “hoarding” practices, as well as publishing monthly reports on shipping updates.

Every 30 days, the company will disclose data advising the community on which algorithms Bitmain is mining for itself as well as the total hashrate of Bitmain hardware on those algorithms. The ASIC manufacturer will also provide regular shipping and volume information of new miners on the official Antminer Twitter account.

Bitmain reiterated its zero tolerance policy on “secret mining” practices. Secret mining is a process wherein ASIC manufacturers mine with new hardware before making that equipment available to the public. The company claimed that it has been always taken a negative stance towards the practice, emphasizing its “long-held zero-tolerance policy” on the matter. The company also clarified that it will not try to mine empty blocks:

“While often described as the result of sinister intent, empty blocks often occur because of issues in block propagation at the protocol level rather than active decision-making by mining pool operators.  We are actively working towards mitigating these issues.”

In August 2017, Antpool mining operator, managed by Bitmain, allegedly caused transaction delays and a surge of transaction fees by mining empty blocks.

Earlier this month, Chinese sources reported that Bitmain is now valued at $12 billion after a Series B funding round. Bitmain ostensibly raised between $300 million to $400 million from Sequoia Capital subsidiary Sequoia China, U.S. hedge fund Coatue, and Singapore-based governmental investment fund EDBI.

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Bitmain Unveils First Ethereum ASIC Mining Gadget

Bitman, a China-based Bitcoin mining firm and manufacturer of ASIC (Application-specific integrated circuits) has again made known it will start selling and shipping the newly unveiled Ethereum mining gadget on 16th July 2018.

Bitmain announced last month that it has also designed a new ASIC-powered Antminer X3 purposely to mine Monero and cryptocurrencies that are dependent on CryptoNight algorithm. The development was met with threat by Monero Developers, claiming to go any length in fighting miners.

However, the newly released Antminer E3 is deployed to mine Ethereum, it has a power consumption of 800W and goes for 800 USD per unit. The mining company on its website says it is sticking to restriction on shipping to customers from China and Taiwan. It also says it will restrict orders to “one unit per user”. Since the announcement was made, Bitmain says the gadgets have been completely pre-ordered.

Meanwhile, users have raised interest on the new device saying it is a good idea for the mining community. The device, according to Bitman can be purchase using with Bitcoin Cash (BCH) and USD.

Series of information have been aired on the new product prior to the announcement date. CNBC, analyst Christopher Rolland, revealed that Bitman was cooking a new device to mine Ethereum crypto asset.

“During our travels through Asia last week, we confirmed that Bitmain has already developed an ASIC [application-specific integrated circuit] for mining Ethereum, and is readying the supply chain for shipments in [Q2 2018]”, stated Rolland.

Founded in 2013, Bitmain, is a firm that produces ASIC chips and mines Bitcoin. The firm as well operates Antpool, which observers say it is the largest Bitcoin mining pools. ASIC, a device by Bitman has been mining Bitcoins for many years.

Does Mining Has A Future?

Cryptocurrency mining has evolved into a big business with the invention of software and hardware. Country like China is receiving a great boost in mining operations despite the country’s stiff policies on cryptocurrency. Different observers have said a lot about mining’s next big boom. It is still possible that some countries will be going into mining to get digital coins to finance their country. However it is not clear what the future of mining is.

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Antpool Adds Support for Siacoin Mining Amid Bitmain Miner Launch

AntPool, one of the largest cryptocurrency mining pools, has announced it will now support the siacoin token.

The announcement of AntPool mining support comes alongside the news that China’s mining chip giant Bitmain, which owns AntPool, has launched a new mining hardware device, dubbed the AntMiner A3. Data shows that, currently, AntPool accounts for 18 percent of the global bitcoin hashing power.

Siacoin is the native token of the sia blockchain, developed by Boston-based blockchain startup Nebulous to support its decentralized cloud storage system.

According to Bitmain, the new 815 GH/s miner supports the “blake2b” hashing algorithm, which is also used to secure the siacoin blockchain.

However, the launch appears to be not well-received by at least one member of the siacoin development team.

One representative, going by the pseudonym “Taek42” on Reddit, argued that Bitmain might put profit ahead of the sia ecosystem. Taek42 added that the sia blockchain could be changed to block mining via the AntMiner A3, but that it would require a soft fork to do so.

While some agreed with Taek42’s sentiment, others welcomed the addition of Bitmain to the sia arena.

“Bitmain selling a Sia miner is great for the price of the coin, it brings us into the mainstream,” wrote JoWi96 on Reddit.

As of press time, Bitmain had not responded to a request for comment.

Computer fan image via Shutterstock

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