With the halving of Bitcoin reached again, there was no question that miners needed to speed up. If miners could not keep up with the increased competition, they would be eliminated by default. The SHA256 hashrate expectations have continued to push application-specific integrated circuits development faster. Both 2019 and 2020 have seen some amazing breakthroughs, so it’s not entirely a surprise to hear that the latest mining rigs coming online in 2020 are hitting hashrates as high as 45% better than previous levels in 2019 only.
The Magic Doesn’t Happen Naturally
The critical factor that allowed bitcoin mining ASIC chips to come into being has been the exponential advancement of chip technology. In a short span of three years, chips have jumped new efficiency barriers and that, of course, produces more significant opportunities. The chip industry itself is already moving from the current 7nm to 3nm processes with a target of 2nm and 1.4 nm within nine years. This was confirmed at a recent technology conference. Intel confirmed they are targeting the 1.4 nm possibility as a realistic expectation shortly.
Today’s ASIC models are already much more efficient than the ones put into service in 2019. They make previous years look like garage technology. For comparison, in 2020, the new generation of Bitmain Antminer S19 Pro (29.5J/TH) is 45% better than previous Antminer S17 Pro models (53J/TH*). If we compare the first models of ASIC miners for Bitcoin with an energy efficiency indicator of 6600J/TH against the latest models, Bitmain Antminer S19 Pro 29.5J/TH, then the energy efficiency of ASIC miners per watt on the algorithm SHA-256 have increased by 223 times since 2013.
The competition at the beginning of 2020 started to get fierce. Bitmain, Innosilicon, MicroBT and StrongU were collectively shipping many new generations ASICs until COVID19 struck. But these machines don’t operate on a string budget. They have extreme efficiency but still, run hot because of the extreme power of hashrate crunching they deliver. With the discussion of the 1.4nm target, the possibilities are off the chart on what kind of hashrate could be achieved in less than a decade going forward.
Pushing Boundaries Has a Cost
The current ASIC mining rigs available online for production acquisition are still operating in 12nm to 7nm in terms of semiconductor chip power. Again, the output from these current ASIC designs was already visible in 2019. Now miners at the top end of hardware production are scrambling to squeeze what they can get from an increasingly mining hardware saturated market.
However, even though everybody is now looking at ASIC to keep climbing in computing power, it doesn’t come free. Besides, mining is not always a priority in the supply chain. Cellphones, tablets and computers are a much bigger market and prioritize orders for new generation chips. Manufacturers who are now under more pressure from the competition see their profit margins shrink, and development costs widen. This results in new generations of equipment that are more and more expensive than the others.
The cost increase in mining alone will force many independent miners off the map when combined with competitors replacing equipment with the latest ASIC technology. No surprise, the pooling of resources will become the norm. Miners who couple their rig resources together, join pools and mining colocation centers to use combined rig infrastructure will realize going forward how to sustain their positions.
Resistance is Futile
There is some expectation that the transition won’t be dramatic or instant. Many bitcoin miners will still try to hold on to older generations for a while, as many as 70 percent of active miners for now in 2020. However, there is a solid third or 30 percent area smoothly moving as quickly as possible to advanced ASIC tech as it becomes available. The one thing holding the industry from going faster is the actual production of rigs, many of them being on backorder due to the high demand. Either way, everyone will have to shift eventually to keep up, and the higher, faster ASIC architecture will be a must with its hyper-speed. What will be interesting to watch is not only how the speed predictions play out but who becomes the primary manufacturer and controller of the mining rig market at the same time. There is no question that the production side has been consolidating for quite some time.