Editor's Note: This article comes from01 Blockchain (ID: Binary010101)Editor's Note: This article comes from
01 Blockchain (ID: Binary010101)
, author: Zhao Yue Zhaosheng Yulin, reprinted by Odaily with authorization.
On the evening of November 19th, at the first light show in Hangzhou Qianjiang New Town, Canaan Yunzhi painted the banks of the Qiantang River with a layer of "Canaan Blue". This is a night worth remembering by Canaan people, because this company will be listed on Nasdaq in the United States two days later, becoming the "first mining machine stock".
In addition, although Canaan Zhizhi’s revenue is more than 99% contributed by the sale of Bitcoin mining machines, Jianan Zhizhi has always positioned itself as a company focusing on the development and production of AI chips during the process of applying for the IPO. semiconductor company” and “a leading provider of supercomputing solutions”.
What kind of chemical reaction can the first encounter between "the first share of mining machines" and Nasdaq produce?
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Looking back on the past of Canaan Yunzhi
Perhaps at the beginning, Zhang Nangeng would not have imagined that "Pumpkin Zhang" and "Jianan Yunzhi" would become the most important labels in his two different stages.
He also did not expect that from the first generation FPGA mining machine, the first ASIC mining machine, to the world's first 7nm mass-produced chip, to becoming the first mining machine manufacturer to submit a prospectus to the Hong Kong Stock Exchange, he With him, Canaan seems to have always been ahead of everyone and stepped on the right outlet, but due to various reasons, it has not become a real "pioneer" in the industry until this time it went public in the United States.
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Starting point: "Pumpkin Zhang" and the opening of the FPGA era
In 2011, the nascent Bitcoin began to enter the ancient land of China. Zhang Nangeng, who was studying for a doctorate in computer science at Beihang University, also came into contact with Bitcoin for the first time at this time.
At that time, Zhang Nangeng was obsessed with the bloody different-dimensional world in the anime while reading his books in the vast sea of books. He is addicted to station B, and there are even rumors that he can watch more than 500 anime a year.
Tech guy, otaku, these words seem a little bit of a bad taste now, but they were the truest portrayal of Zhang Nangeng's life at that time. Until 2011, the free and magical Bitcoin broke into his life, allowing him to see the possibility of changing a parallel world that is more real than the anime world.
In 2011, Zhang Nangeng, who was born in technology, began to research bitcoin mining machines, and appeared in the bitcoin community bitcointalk.org under the ID "ngzhang", an early bitcoin forum created by Satoshi Nakamoto and often spoke and discussed.
So far, Bitcoin mining has experienced the initial computer CPU mining and GPU mining, and officially entered the era of FPGA in 2011.
In the Bitcoin world, there has been a "pumpkin card" since then.
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Faith: Defending the Freedom of the Bitcoin World and the Coming of the ASIC Era
The famous "Pumpkin Zhang", while continuing to study for a Ph.D. and animation "big cause", relied on selling FPGA mining machines for part-time work and study. If the story only ends here, perhaps there will be no later Canaan Yunzhi and the mining circle.
But accidents always come unexpectedly. In June 2012, the American Butterfly Lab announced that it was preparing to develop an application-specific integrated circuit (ASIC) mining machine whose performance was far superior to the mainstream FPGA mining machines at that time. If successful, Butterfly Lab will be able to reduce the dimensionality of other mining machines on the market with the new mining machine, and have the opportunity to control more than 51% of the computing power of the Bitcoin network, gaining control over the free Bitcoin world.
Even if Butterfly Labs does not launch a 51% attack on the Bitcoin network, the potential threat has already made the Bitcoin community uneasy. To crush this threat, either the development of Butterfly Labs will fail completely, or others will develop ASIC mining machines faster, bringing the entire Bitcoin mining industry into the ASIC era.
In order to defend the Bitcoin world, "Pumpkin Zhang" Zhang Nangeng and "Roasted Cat" Jiang Xinyu among the "Four Heavenly Kings" of the Chinese currency circle at that time announced the development of ASIC mining machines.
Zhang Nangeng also met another key figure at this time: Yifu Guo, a Chinese-American programmer. The two hit it off and decided to jointly develop ASIC mining machines.
In September of the same year, Zhang Nangeng and Guo Yifu showed samples of ASIC mining machines they manufactured. Zhang Nangeng, who is keen on animation, named the new mining machine "Avalon".
Avalon is the strongest defensive weapon in the Japanese anime "Fate". It is also another name for Welsh Paradise in the legend of King Arthur, and the final habitat of King Arthur. For Pumpkin Zhang, Avalon will be the strongest weapon for him to "maintain world peace" and resist the butterfly mining machine, and it is also the habitat of his soul, where he poured his expectations and dreams.
In order to raise funds for research and development, Zhang Nangeng and Guo Yifu decided to pre-sell the mining machine, and set the "overlord clause" that seems a bit unbelievable now: no refund under any circumstances, no guarantee for delivery time and after-sales, etc.
Such "unequal clauses" did not deter miners who were paranoid about computing power at the time. The first batch of 300 miners priced at $1,299 sold out quickly.
However, the development of ASCI mining machine is not as easy as imagined. Although Butterfly Lab has repeatedly delayed the delivery of ASIC mining machines, it gave Zhang Nangeng a chance to breathe. However, Avalon, which Zhang Nangeng and Guo Yifu were originally scheduled to debut at the end of 2012, also encountered an unknown technical bottleneck.
After hesitating for a long time, Zhang Nangeng hoped to apply for a one-year leave of absence from his tutor to concentrate on solving the technical problems of ASIC mining machines, but was mercilessly rejected. After repeated communication with no results, Zhang Nangeng made a bold decision: In this case, he should drop out of school.
29-year-old Zhang Nangeng left the ivory tower dreamed of by countless people with the belief of defending the Bitcoin world.
According to people in the circle later, at that time, each Avalon mining machine could dig out 5-7 bitcoins, and it could earn tens of thousands of yuan a day. For a time, Luoyang paper was expensive, and many miners waited sleeplessly in front of the computer for several days before and after Avalon's release.
After the success of Avalon, Pumpkin Zhang gradually faded out of people's field of vision, while Zhang Nangeng started a new journey of Jianan Yunzhi.
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Turning point: open source of hardware solutions and unexpected supervision
April 2013, Beijing.
Zhang Nangeng and his partner Li Jiaxuan each invested 100,000 yuan to establish "Beijing Jianan Yunzhi Information Technology Co., Ltd."
The word "Jia Nan" comes from the "Jia" in Li Jiaxuan's name and the "Nan" in Zhang Nangeng's name.
Thanks to the fame accumulated by "Pumpkin Zhang" and Avalon, the company's mining machine business is booming. But at this time, Zhang Nangeng made another amazing decision: to give up the overall assembly and sales of mining machines, and focus on chip R&D and production. At the same time, Canaan announced that it will open source all mining machine hardware solutions except chips.
Businessmen, who smelled the taste of profit, flocked in, took advantage of Jianan Zhizhi's open source, and began to share the mining machine assembly market that Zhang Nangeng gave up, earning a lot of money. Wu Jihan, who later founded Bitmain, the overlord of mining machines, was also one of the many agents of Avalon chips at that time.
But the pre-sale model of Avalon chips soon encountered Waterloo. Canaan has repeatedly failed to deliver chips on schedule, resulting in many small and medium-sized agents being unable to deliver mining machines to users on schedule, facing business crises, and even going bankrupt. The word-of-mouth of Canaan Yunzhi and Avalon fell to the extreme for a while.
Wu Jihan also pre-ordered a batch of Avalon chips at that time. He wanted to make a lot of money, but he was "tricked" by Zhang Nangeng. He was always arrogant and could only nod and bow to his customers and investors. forgive.
This incident made Zhang Nangeng a "liar" in Wu Jihan's mouth, and also planted the seeds of his own mining machine in Wu Jihan's heart. Of course, this is something.
Later, Canaan Yunzhi, which re-operated in the mining machine assembly business, once recovered the decline in the mining machine market with the second-generation Avalon mining machine. However, at the end of 2013, the central bank and other five ministries and commissions issued the "Notice on Preventing Bitcoin Risks", stating that Bitcoin is not issued by monetary authorities, does not have currency attributes such as legal compensation and mandatory, and is not a currency in the true sense.
With the advent of regulation, the price of Bitcoin has fallen rapidly, and the mining machine market has become increasingly deserted. Canaan Zhizhi's life is sad.
In December of the same year, Liu Xiangfu increased his capital by 50,000 yuan to join Jianan Yunzhi and became the third shareholder.
In May of this year, Jihan Wu and Ketuan Zhan founded Bitmain.
Declining: Cruel mining machine industry survival rules
The rules of survival in the mining machine world are simple, computing power is king, and time wins.
In the high-speed iteration of mining machine chip technology, once a large amount of money and personnel are invested in research and development of products that lag behind competitors, it means that all efforts may be in vain. The core competitiveness of mining machines lies in the ratio of computing power and power consumption (that is, the electricity required to mine a bitcoin).
Canaan’s chip technology does not lose to Bitmain, but it was defeated by time at the beginning. In August 2015, Bitmain began to pre-sell the Antminer S7 mining machine, with a power consumption of only 257.3 (W/Ths). Two or three months later, Canaan’s Avalon A6 mining machine was launched, with a power consumption of 300 (W/Ths).
Relying on the short time advantage and weak performance advantage, Bitmain quickly seized the market, with a market share of 80%. Immediately afterwards, Bitmain launched the most popular Antminer S9 mining machine so far, opening up the distance with Canaan Yunzhi in one fell swoop, and becoming the overlord of the mining machine world.
The second half of 2015 was the most difficult time for Avalon and Canaan. Guo Yifu, who had been in charge of the sales of Avalon mining machines before, has also left the team and gradually faded out of people's sight. At this time, Zhang Nangeng's Canaan Intellectual must not only deal with the pressure from rivals such as Bitmain, but also need to form a new sales team to quickly digest the original inventory of mining machines.
However, according to a blockchain report, although the 7nm chip was released first, in fact, almost no miners have seen Canaan's 7nm chip mining machine in the market. The A10 mining machine launched after the release of the 7nm chip did not use the 7nm chip, but returned to 16nm. According to the prospectus, the latest mining machine A11 launched by Canaan is not equipped with a 7nm chip, but is suspected to use Samsung's 8nm chip.
And its opponents have already realized the commercial use of 7nm and 8nm chips. The 7nm chip ultimately failed to become a sharp weapon for Canaan Zhizhi to "overtake".
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Dawn: Financing Efforts and Difficult Road to Listing
Roasted cats disappeared, Bitcoin plummeted, and regulations were tightened... In the past few years of the bear market, the turmoil in the mining machine market has never stopped.
Canaan Yunzhi, which has survived the cold winter, urgently needs financing for development. The initial financing process was so slow that some people regarded it as a "tulip bubble", but time gave Canaan a chance to prove it.
From 2015 to 2017, Canaan Zhizhi ushered in a stage of rapid financing development.
Kong Jianping, who is now the co-chairman of Canaan Zhizhi’s board of directors, joined Canaan Zhizhi during this time period.
Subsequently, Kong Jianping acquired a total of 3.5% of the shares held by Yao Yongjie and Yinglan Investment in February 2016, and part of the shares held by Liu Xiangfu in June 2019, step by step becoming the No. Three major shareholders.
Liu Xiangfu, the previous third largest shareholder, withdrew from the senior management of Canaan Zhizhi in January 2019 due to differences with the company's overall strategy.
In addition to frequently accepting external financing, Canaan Zhizhi is also actively seeking listing opportunities. And all of this happened after Kong Jianping joined Canaan Yunzhi.
In June 2016, Luyitong (300423.SZ), which had been listed on the A-share market for 1 year and 4 months, began to plan the first major asset restructuring, and the target of the restructuring was Canaan.
Lu Yitong plans to pay 1.061 billion yuan in cash and 1.999 billion yuan by issuing shares to acquire all the shares from 14 shareholders of Canaan Zhizhi. The total transaction price is 3.06 billion yuan. However, the acquisition was ultimately terminated due to objective factors such as the domestic market environment and regulatory policies.
After failing to land on the A-share market, Jianan Zhizhi began to prepare for the new third board. In August 2017, Canaan applied for listing on the NEEQ. But in September of that year, the wind of regulating and regulating cryptocurrencies and transactions suddenly hit. After three rounds of inquiries, in March 2018, Jianan Zhizhi finally failed the New Third Board.
In May 2018, Canaan reorganized and officially submitted a prospectus to the Hong Kong Stock Exchange, becoming the first mining machine company to apply for listing on the Hong Kong Stock Exchange. Ebang International and Bitmain subsequently submitted IPO applications to the Hong Kong Stock Exchange. However, the three major mining machine manufacturers were all rejected by the Hong Kong Stock Exchange.
After resting for nearly a year, Canaan Zhizhi set its sights on the U.S. stock market and submitted a prospectus to the U.S. SEC on October 29, 2019 Beijing time, planning to list on NASDAQ.
This time, the dawn of victory is in sight. Canaan Zhizhi is about to become the first mining machine company in the true sense.
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In October 2019, Shenzhen Huaqiang North SEG Plaza, there are still many shops selling mining machines, but no one knows which batches of these shops are settled in. Most of the shop owners who are engaged in the mining machine business make quick money. main purpose. According to media reports, Liu Yong’s shop at the elevator entrance on the 5th floor was withdrawn at the beginning of this year. The owner who took over the shop is said to be very optimistic about the future of Bitcoin. For Liu Yong, he just wants to get the transfer fee quickly and do something else. .
The good news of the blockchain industry in late October drove up the price of Bitcoin, and the price broke through the $10,000 mark in a short period of time. However, the mining machine business in Huaqiangbei is still deserted. In the view of some mining machine dealers, the short-term increase of Bitcoin has not yet reached the level to boost the business of the entire mining machine market, and everyone is actually in a wait-and-see state.
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At such a lukewarm juncture, Canaan Zhizhi secretly submitted an IPO application to the US SEC. In the eyes of many people, this is an excellent "self-help" opportunity for Canaan Zhizhi. It is estimated that Canaan Zhizhi's revenue in 2019 will only reach one-fourth of that of MicroBT and one-tenth of that of Bitmain. . Perhaps by seizing the opportunity of becoming the "No. 1 mining machine stock" on Nasdaq, Canaan Yunzhi can gradually regain its status as the "mining overlord".
The competition in the mining machine industry has always been fierce. Every market participant is involved in an "arms race". The performance of mining machines produced by manufacturers is constantly improving. Control costs. Along with the endless market competition in the mining machine industry is the ever-changing competitive landscape. Among the former three giants of mining machines, Bitmain and Canaan Zhizhi are still struggling to maintain the top two positions. Micro and Innosilicon are replacing it.
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The main business advantage is weak
However, Canaan Zhizhi’s business of selling bitcoin mining machines did not bring profits. Instead, it has been in a state of loss since the second half of 2018. Losing business. It can be said that the business of many bitcoin mining machine manufacturers will be directly affected by bitcoin price fluctuations, so their performance is extremely cyclical and unsustainable.
Xu Yingkai, the founder of the blockchain venture capital organization BlockVC, once said in an interview that the cyclical nature of digital assets has led to uncertainty in the sustainable operation of mining machine manufacturers. Upgrading, supply chain integration, mining machine channel sales and capital chain management and control capabilities are the core.
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7 nanometer mining machine collapsed
Canaan Creative is a fabless company, also known as an IC designer, which is only engaged in chip design, research and development, application and sales, while chip manufacturing, packaging and testing are handed over to third-party cooperative companies. Canaan’s partners include TSMC, Samsung, STATS ChipPAC, ASE and Siliconware, and other chip manufacturing and packaging and testing companies.
In addition, Jianan Yunzhi’s prospectus shows that as of the end of June 2019, its prepayment reached 530 million yuan, an increase of nearly three times compared with the end of 2018. The outside world generally believes that this is a sign that Canaan has placed a large number of orders with chip suppliers. However, some media pointed out that because the financing ability is not as good as that of its competitor, Bitmain, Canaan has a weak voice in the process of cooperating with TSMC. In the prospectus, Canaan Zhizhi said, "TSMC, the industry's leading fab, has limited production capacity and will supply limited supplies to customers who pay in advance. Bitmain provides more prepayments with its financing advantages, so it can get more With more TSMC production lines, Bitmain has sold more products.” According to rumors, TSMC and Bitmain signed a secret VAM agreement on 7nm chips, so 7nm chips will no longer be supplied to other mining machine manufacturers.
The prospectus also revealed that Canaan’s latest product, the A11, uses an 8nm chip suspected to be Samsung’s, and does not use a 7nm chip. Due to the impact of the Japan-South Korea trade war, Samsung’s photoresist was embargoed, so product shipments were affected. Therefore, Jianan Zhizhi cannot obtain enough high-quality production capacity from the two major chip suppliers of TSMC and Samsung.
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According to the prospectus of Canaan Yunzhi, Canaan Yunzhi sold a total of 546,000 mining machines in the second half of 2018 and the first half of 2019, but 468,000 of them were the old A8 series. In the first quarter of 2019, the average price of these A8 mining machines was only 800 yuan. In addition, in the first half of this year, Jianan Zhizhi made an inventory write-down of up to 510 million yuan for its mining machines.
Recently, on Canaan’s official website, A8, A9 and A10 mining machines are in stock, and can be shipped within 7 working days. The large inventory write-down and greatly shortened delivery time seem to be Canaan Zhizhi's efforts to increase revenue and prepare for the listing.
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Struggling to get rid of the title of "mining machine giant", in the newly released prospectus, Canaan Zhizhi positions itself as a "supercomputing solution provider" and "artificial intelligence chip company".
On May 17, 2019, Zhang Nangeng, the founder of Canaan, revealed to the media at the 2019 World Semiconductor Conference that Canaan’s current investment in AI chips is similar to that in mining machines. In 2019, Canaan Yunzhi’s artificial intelligence chip revenue is expected to be tens of millions of yuan. It plans to use 3 years to achieve a 1:1 ratio of mining machine and artificial intelligence business revenue, and the two have reached a basic balance, and they are very optimistic about the artificial intelligence market.
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Chips are "true love", grabbing the AIoT market
Canaan Creative’s exploration in the field of artificial intelligence chips originated in 2015. Before 2015, Canaan’s chips were only suitable for Bitcoin mining machines.
In the office exhibition hall of Jianan Zhizhi, the first thing that catches the eye is not the Avalon mining machine, but the 3D naked-eye TV equipped with the latest chips. Chips are "true love" for Canaan.
According to different application scenarios, artificial intelligence chips are mainly divided into cloud chips and end-side chips. On-device AI chips have higher requirements on energy consumption. On the one hand, they require high performance, and on the other hand, they require low cost and power consumption. For Canaan, which started out as a mining machine chip, focusing on end-side AI chips seems to be more advantageous.
In 2016, as AlphaGo detonated artificial intelligence, Jianan Zhizhi announced to the outside world that it was developing artificial intelligence end-to-end computing chips. According to Kong Jianping, co-chairman, since 2016, Canaan’s investment in artificial intelligence chips has exceeded the blockchain part.
In September 2018, Canaan released its first-generation artificial intelligence chip, Kanzhi K210, and mass-produced it in the fourth quarter of 2018. Kanzhi K210 uses its completely self-developed neural network accelerator IP, and has machine Vision and speech recognition capabilities, enabling high-speed convolutional neural network computing at ultra-low power consumption. Since then, Kanzhi K210 has become Canaan Zhizhi's star product on artificial intelligence chips. At present, this chip is mainly used in the field of AIoT (AI+IoT), which can provide solutions for smart home, smart community, smart education and other fields.
At present, AIoT is also highly sought after by giant companies. Huawei announced its AIoT strategy for the first time, JD.com integrated and upgraded its IoT business into the Xiaojingyu AIoT ecosystem, and Xiaomi positioned its strategy for the next five years as a "mobile phone + AIoT" dual-engine drive strategy.
According to the prospectus, the target customers of Jianan Yunzhi's artificial intelligence chips are companies in the Internet of Things industry, and plans to increase sales investment to cover the main customer groups in the Internet of Things field.
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After the "first share of mining machines", can it seize the high ground of artificial intelligence chips?
The layout in the AIoT field shows Canaan Creative's forward-looking in the development of AI business. But behind the forward-looking layout, the development of Jianan Zhizhi seems to have not achieved the expected goal.
According to the latest prospectus disclosure, as of the third quarter of 2019, Canaan’s revenue from artificial intelligence products was only 1.4 million yuan. Level" goals are very different. In addition, as of the third quarter of 2019, Canaan’s revenue from artificial intelligence products accounted for less than 0.15%, and revenue from blockchain products exceeded 99.85%, and its revenue is highly dependent on mining machines.
Three years later, will Canaan successfully achieve the goal of 1:1 income from mining machines and artificial intelligence business?
No matter from the perspective of the development of the global market or the relevant domestic policy environment, artificial intelligence chips are a blue ocean market with great potential that Canaan Creative is facing.
According to research firm Frost & Sullivan, by the end of 2023, the global artificial intelligence chip market is expected to reach about 221.6 billion yuan, an increase of 45.1% from 34.4 billion yuan in 2018.
In April 2018, Jiang Yang, vice chairman of the China Securities Regulatory Commission, said when investigating Jianan Yunzhi, "No matter what your chip is used for, it is still a chip company in essence. I hope you will be listed in China."
Recently, Zhang Nangeng also said in an interview with "China Enterprise Magazine" that the future chip center is in China. At present, the domestic chip environment is relatively good, and many policies are tilted, including the national industrial plan. A lot of investment has been invested in the chip industry.
However, it seems that Jianan Zhizhi is also facing huge risks from the research and development of mining machine chips to the research and development of artificial intelligence chips.
As mentioned in the prospectus, "Because ASIC may not develop into a mainstream solution for AI technology and applications, we may not be able to use ASICs to achieve growth in the AI technology and application market. If the AI market does not develop as currently expected, and Our inability to penetrate new application markets, and our future revenue and profits could be materially and adversely affected."
Zhang Nangeng also stated in public that the design and manufacture of artificial intelligence chips requires a lot of energy, and the final application scenario is also particularly important.
Artificial intelligence chips require huge investment in research and development. According to the disclosure of the prospectus, Canaan Intellectual Property has not increased its investment in research and development. The 138 million yuan in the same period fell by 24%.
Relevant media have used Canaan’s revenue from mining machines in 2018 to conservatively estimate the revenue of artificial intelligence business in three years. The revenue of artificial intelligence business needs to reach 2.698 billion yuan, while the domestic artificial intelligence unicorn company Megvii’s revenue in 2018 was only slightly over 1.4 billion yuan.
From this point of view, it is not easy for Jianan Zhizhi to seize the track of artificial intelligence chips.
