It is no secret that the bitcoin mining industry is being battle-tested in the wake of the fourth halving. Hash price (revenue per terrahash) has reached historic lows as bitcoin\u2019s block subsidy has been slashed. Meanwhile, the post-halving mempool frenzy has waned, adding fuel to the fire on already strained mining operators.<\/p>\n
Nangeng Zhang, Founder and CEO of Singapore-based Canaan Inc, the creator of the first bitcoin mining application-specific integrated circuit (ASIC), sat down with Bitcoin Magazine<\/em> for the firm\u2019s first-ever interview with a North American media outlet to weigh in on the state of the industry. Zhang commented on the origins of bitcoin mining and offered his perspective on the landscape for chip design as well as trends in environmental sustainability.<\/p>\n Zhang also identified burgeoning opportunities for Bitcoin in the Middle East, as well as the convergence between the bitcoin and artificial intelligence (AI) industries.<\/p>\n Listen<\/a> to the full audio interview featuring Canaan CEO Nangeng Zhang on the Bitcoin Magazine Podcast. Click here<\/a> to tune in.<\/p>\n Canaan, founded in 2013, revolutionized mining with the launch of its first AvalonMiner ASIC machine \u2013 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, the embracing and commodification of specialized ASIC hardware saw commercial-scale mining operations begin to take shape.<\/p>\n This step-change by Canaan did not occur in a vacuum, but led to the ubiquitous proliferation of ASIC-based hashing after the firm open sourced both its Avalon hardware and management software. Zhang noted that this embrace of the open source movement in the early days of bitcoin was \u201cnot a decision\u201d but rather \u201ca requirement for anyone who wants to get involved in the blockchain community\u201d and a means \u201cto decentralize computing power all over the world.\u201d<\/p>\n \u201cThe best way to defend against [51% attacks], was to rapidly distribute ASIC-based computing to users worldwide\u201d. In Zhang\u2019s estimation, the risk of a 51% attack has greatly diminished due to the democratization and wide-scale deployment of ASICs. The open source nature of Canaan\u2019s chip design has since led major firms including China-based Bitmain and computing stalwart Intel to create their own ASIC machines.<\/p>\n Canaan, as a designer of ASIC chips, has been a beneficiary of the boom in semiconductor manufacturing over the past decade-plus. At the heart of this progress lies Moore\u2019s Law \u2013 an observation that computational efficiency has approximately doubled every 2 years. Today, firms including Taiwan Semiconductor (TSMC), Samsung (SSLF), and Semiconductor Manufacturing International Corporation (SMIC) are ramping up towards 3 nanometer chip production in this quest for optimization.<\/p>\n However, the move toward smaller and smaller scale architectures for semiconductors is not without challenges. Increasing transistor density on smaller and smaller chips, namely, sub-2 nanometer scales, invokes quantum, rather than classical, effects. This regime shift leads to transistor malfunction and a potential divergence with Moore\u2019s Law.<\/p>\n The question has now become: will Moore\u2019s Law hold, or is the classical computational boom becoming a quantum bust?<\/p>\n Zhang, faced with the question of these fundamental constraints on ASIC computation, acknowledged \u201cin the past, when we boosted performance, the cost per terrahash went down. Today, this curve has flattened. This indicates that technological advancements are entering a new phase.\u201d<\/p>\n \u201cWe are indeed seeing a slowdown in the advancement of process nodes, promoting us to adopt new transistor technologies like GA (gate array) or nanosheet technologies along with backside power delivery. This is not just making the surface smaller, but changing the structure of the circuit [itself].\u201d<\/p>\n \u201cBitcoin computing appeals to a purely digital logic, but today, we are moving closer to a mixed signal design for analog implementations.\u201d This increase in complexity, according to Zhang, suggests the need for \u201cdesign technology co-optimization (DTCC)\u201d between designers such as Canaan and the foundries that produce the chips themselves.<\/p>\n Despite these challenges, Zhang believes that AISC efficiency is \u201cstill on the rise for the next 3-5 years\u201d and the company plans to release at least 1 new product per year with \u201cover 20% efficiency gains\u201d per generation.<\/p>\n This efficiency gain was on display at the Bitcoin Asia conference in Hong Kong on May 9th, where Canaan launched its next-generation A15 AvalonMiner<\/a>, boasting an 18.5J\/T efficiency in comparison to the ~20J\/T afforded by the previous A14 model<\/a>. Zhang noted the A15 as being particularly optimized for variable environmental conditions.<\/p>\n In particular, Canaan has enabled overclocking capabilities in the A15, and Zhang poked fun at the common refrain from buyers who often remark: \u201c\u2018oh you can get extra performance for free?!\u2019\u201d Sadly that\u2019s not the case, according to Zhang, but the added capabilities promise to create additional operational flexibility for customers of the A15.<\/p>\n Now, more than ever, miners are on the lookout for efficiency gains to\u2026 *drumroll*… reduce their costs and increase revenue. This is, of course, par for the course, but miners are turning to new technologies and geographies in their quest for cheap power.<\/p>\n Zhang noted a strategic shift on the part of Canaan to meet this change in the market, emphasizing the firm\u2019s recent move to partner with mining firms in the Middle East region. \u201c[The Middle East] is eager to invest in high-tech industries. These countries are particularly welcoming to Bitcoin and cryptocurrency. The Middle East holds great promise to become a crucial digital hub.\u201d<\/p>\nThe Open Source Core of Bitcoin Mining<\/h2>\n
Running (Bitcoin) Up Against Moore\u2019s Law: Trends In Chip Efficiency<\/h2>\n
Decentralizing Computation: A Look To The Middle East<\/h2>\n