The Chinese government has maintained its harsh stance on Bitcoin and blockchain-related entities for quite some time now. Last year alone, the government moved to crack down on all ICOs with uncertainty lingering over its next move for this year.
For companies like Bitmain (one of the largest manufacturers of cryptocurrency mining rigs) that have made huge profits with the advancement of mining Bitcoin, there is no doubt that the future operations of the business hinge on the attitude of the government towards this emerging new industry. According to a rare series of interviews held by Bloomberg, Bitmain are looking to shift gears and move into the business of manufacturing AI chips.
The Story of Bitmain’s Growth
Although Bitmain has largely become a global manufacturer to reckon with in its short time span of existence, the journey so far has been anything but plain sailing. In the early days of Bitcoin, back when mining was highly profitable and hobbyists could mine thousands of Bitcoins with inexpensive graphic cards, Bitmain would have made overwhelming profits considering the difficulty of mining at the time.
In contrast, a half decent miner today is hooked up to a server size box with more than a dozen high powered chips, each priced more than double that of a single graphics card. In fact, Jihan Wu, the CEO of Bitmain Technologies agrees that at the time, mining seemed to be the most reasonable business model as he was “100 percent sure it is legal”, especially when compared to a cryptocurrency exchange, which involves more risks.
Fragmentation of the industry
At the moment however, Bitmain’s main customers are no longer hobbyists and libertarians looking to become pioneers of a new technological revolution. Rather, it is large mining entities with cheap access to electricity – mostly in rural parts of China where cheap coal is available – that are reaping the benefirts. As the largest manufacture of ASIC miners, Bitmain has had significant political strength in the cryptocurrency world, especially when it comes to deciding the future of Bitcoin.
With such rapid advancement, the cryptocurrency world has become so fragmented such that small disagreements have led to the emergence of entirely new cryptocurrencies being forked out of Bitcoin – as was the case with Bitcoin cash.
Wu also admits that “the cryptocurrency world is becoming more diversified” despite the ongoing disputes and uncertainty. As a result, his company has had to sell more customized mining rigs than ever before, with more requests for different coins coming in.
Remaining ASIC resistant
Amid all of this has also been the constant struggle to remain relevant in the fast-paced crypto space, while more cryptocurrency enthusiasts complain about Bitmain’s dominance as being a threat to decentralization. While the company is looking to build customized mining rigs for specific cryptocurrencies, the development teams of particular cryptocurrencies e.g. Ethereum and Monero, have been working to make these currencies ASIC resistance and render Bitmain’s mining machines useless.
To these concerns, however, Wu says:
if it’s not us , it might be Intel , it might be Nvidia , it might be AMD
It seems therefore, that the only way for Bitmain to remain dominant in the chip manufacturing industry is to go into the AI chip manufacturing business. The company has already started selling ASIC chips designed for machine learning with the flagship Sophon BM1680, which came out last year. The company also plans to venture into other markets such as the US market, as it doubles down on its dominance of the Chinese market; especially given that the Chinese government is planning to be the biggest AI player on earth by 2030.
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