Editor's Note: This article comes fromA blockchain (ID: yibenqkl), Author: Ratchet, reproduced by Odaily with authorization.
Editor's Note: This article comes from
A blockchain (ID: yibenqkl)
A blockchain (ID: yibenqkl)
, Author: Ratchet, reproduced by Odaily with authorization.
"The first share of mining machines" and "the first share of the blockchain", people put many labels on Jia Nan.
However, in the eyes of some investors, the listing of Canaan does not mean that the spring of mining machine companies is coming. On the contrary, they believe that the best time for mining machine companies to go public is over.
Almost all mining machine companies are trapped by the supply chain. The currency price has been sideways for a long time, mining output has been halved, and the performance of mining machines has been limited. The golden age of mining machine companies has passed.
Where is the next era of mining machine companies?
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01 Mining situation
Canaan is listed.
It hit the IPO four times, and today it finally rang the bell on Nasdaq. "IPO is not the ultimate goal, but our new beginning." Canaan founder Zhang Nangeng said.
On November 3, Canaan updated its prospectus, lowering the proposed fundraising amount from US$400 million to US$100 million. Some investors speculated that the reduction in numbers may be related to the poor performance of the road show.
"Actually, mining machine manufacturers are not in the market for money, because they are not short of money at all." Some investors pointed out.
"During the bull market, miners gave them deposits of more than 100 million U.S. dollars a month." Chen Lei, who runs a mining machine business in Huaqiangbei, told a blockchain.
His numbers are slightly exaggerated, but they are not made out of thin air. According to the prospectus, in the first quarter of 2018, Canaan’s revenue exceeded RMB 1 billion.
In Chen Lei's view, mining machine manufacturers can also "hibernate" in a difficult bear market. "When the bull market comes, mining machine manufacturers will respond to everyone, and miners will still line up to send money."
If it is not for money, what is Canaan, which hit the IPO four times in three years, for what?
"Canaan's listing is mainly to gain the recognition of the mainstream market." Sun Yuan, a blockchain researcher, said, "In addition, now is the best time for mining machine manufacturers to go public. If Canaan drags on, it may be difficult to go public. "
Jia Nan's life is not easy.
According to the self-media "Wu Shuo Blockchain" report, Canaan's revenue in 2019 is only about one-fourth of Shenma's and one-tenth of Bitmain's.
"Wu Shuo Blockchain" explained that TSMC signed a secret agreement with Bitmain, and 7nm mining chips will only be supplied to one manufacturer of Bitmain.
However, the recent situation in the mining circle is treacherous. Not only Canaan, but other mining machine manufacturers such as Bitmain are also facing an unprecedented crisis.
On October 29th, Jihan Wu suddenly sent a letter to all employees, announcing that Ketuan Zhan, the major shareholder of Bitmain, would be removed from all positions.
This move has caused a lot of controversy, but it has also been recognized by many people. For example, Yang Haipo, Wu Jihan's "ally" and the founder of ViaBTC, posted an article in support of Wu Jihan.
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Yang Haipo Weibo
But in his blog post, he used two puzzling words: "the most critical moment" and "Bitmain fell to the altar".
According to multiple media reports, since 2016, the 12nm, 10nm and other chips developed by Bitmain have all failed. During this period, Shenma mining machine led by Yang Zuoxing rose strongly.
However, Shenma's immediate crisis is more serious. At the end of October, it was reported that Yang Zuoxing, the founder of Whatsminer, had been taken away by the police to assist in the investigation. The reason is rumored to be the alleged theft of trade secrets.
In the early years, Yang Zuoxing participated in chip research and development in Bitmain as a part-time job. Afterwards, due to the disagreement on equity treatment, Yang Zuoxing left and founded Shenma Mining Machinery.
As early as 2018, the two parties went to court over a patent dispute, and Bitmain lost the case. It is rumored on the Internet that Yang Zuoxing was "taken away by the police" this time, which is also related to Bitmain's reporting to the police.
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02 Increased competition
It is obviously not a coincidence that mining machine manufacturers have collectively encountered a crisis. And the crisis they are facing is also the result of intensified competition in the mining machine market.
"There are indications that the competition among mining machine manufacturers has become fierce." Sun Yuan pointed out, "Mining machine manufacturers are all vying for each other, customers, time, and suppliers."
Let's talk about grabbing customers first.
"Miners don't have any brand loyalty when buying mining machines." Chen Lei said, "Everyone wants to make money. As long as miners can make money, it is a good mining machine."
He revealed that the M10 mining machine released by Whatsminer at the end of 2018 has an excellent cost performance ratio, while Bitmain and Canaan in the same period have almost no products that can be sold. This phenomenon did not change until the launch of the Antminer S17 series.
From the perspective of the outside world, the anxiety within Bitmain comes from the strong rise of Whatsmina. In the end, Bitmain's internal conflicts broke out concentratedly, and Wu Jihan, unwilling to fail, chose to seize power directly with an iron fist.
Another crisis for mining machine manufacturers comes from time.
According to the plan, Bitcoin will be halved in May 2020. At that time, the income of miners will also be affected.
"After the halving, if the currency price is still at the current level, the big miners will choose to die, and the small miners will definitely be out." Miner Wu Di said.
Being out means selling the mining machine and leaving. At that time, a large number of second-hand mining machines will further squeeze the market space of first-hand mining machines, and the business of mining machine manufacturers will be even more difficult.
In May of this year, the currency market recovered, and Bitcoin rose all the way from $3,000 to $13,000. Miners ordered frantically, and mining machine manufacturers began to ship in large quantities.
However, since then, the price of Bitcoin has been sideways for a long time, and everyone's enthusiasm has gradually cooled."In Huaqiangbei, the price of second-hand mining machines has been falling for two months." Chen Lei said, "There are more and more new mining machines in supply, and the currency price has not improved. No one wants to buy second-hand mining machines."In his view, if the price of the currency does not rise sharply, before and after the halving of Bitcoin, the mining machine will definitely not be easy to sell. Mining machine manufacturers must seize the time now and sell more mining machines.）
In addition to grabbing customers and time, the core struggle of mining machine manufacturers is to grab suppliers.
After Canaan’s prospectus was disclosed, a blockchain once reported that the company’s biggest crisis right now is the change of suppliers. (See:
"Deep Digging Canaan Yunzhi Prospectus:
A loss of 420 million yuan in the past year, changing suppliers to gamble on the future"
Whether it is Bitmain, Canaan or Whatsmart, they are just chip design companies and do not have production capacity. In the chip industry, they are called "fabless factories", and a "fab" with foundry capabilities must be found in order to obtain chips.
Among them, TSMC has a close relationship with Bitmain. There are rumors that TSMC’s 7nm chips are only supplied to Bitmain. Lin Feng, who is close to TSMC's supply chain, told IBlockchain that TSMC once set up a dedicated production line for Bitmain at its Nanjing factory to supply Bitmain.
In addition, Lin Feng revealed that when Canaan places an order at TSMC, it needs to pay in full in advance, while Bitmain only needs to pay 50% in advance to place an order.
The strong binding between TSMC and Bitmain made Shenma and Canaan helpless to switch to Samsung.
At the conference site of Whatsminer M20 mining machine, Whatsmart invited the general manager of Samsung Electronics’ wafer foundry business to speak on stage. And Canaan’s new mining machine is also suspected to have switched to Samsung’s arms.
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At the Shenma M20 press conference, Yang Zuoxing shook hands with Song Zhexie, head of Samsung’s related business
According to Canaan’s latest prospectus, its latest A11 series mining machines use 8nm chips. In addition, in the first quarter of 2020, Canaan will also mass-produce 14nm chips.
In his view, mining machine manufacturers vying for supplier capacity is essentially a zero-sum game.
Lin Feng revealed that the mining chip business accounts for less than 10% of TSMC's internal revenue, "this is an artificially set figure."
Around 2018, the skyrocketing currency price gave rise to unprecedented demand for mining machine chips, and TSMC’s revenue increased significantly as a result. However, as the currency price fell, mining machine manufacturers cut orders one after another, and TSMC's production plan was disrupted.
"So, now a foundry like TSMC will set a production capacity share for mining chips every year." Lin Feng said, "The price of the currency will not rise much, and the price of the currency will not fall less. There are so many in total. If several mining machine manufacturers scramble together, they will naturally scramble for blood."
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03 Endgame
As a supplier, the fab is the lifeblood of mining machine companies. Mining machine companies need to cooperate with fabs in every link from chip research and development, tape-out (that is, chip trial production) to mass production.
Canaan’s prospectus discloses that the company cooperates with TSMC, and needs to negotiate with TSMC to formulate a half-year procurement plan and make a full prepayment so that TSMC can allocate production resources. From placing an order to delivery, TSMC needs three months.
The fab's own problems will also directly affect the production capacity of mining machine companies. Canaan’s prospectus shows that TSMC was attacked by hackers in 2018, and Canaan’s 128 7nm wafers were forced to delay shipments by 9 weeks.
In addition, during the Japan-South Korea trade war in July this year, Samsung's photoresist, an essential raw material in chip production, was cut off by Japan. The shipment of Shenma’s mining machines has also been dragged down.
Lin Feng speculates that Canaan will fully support Samsung in the future. The reason why Canaan does not disclose the chip parameters of the new mining machine is because it still relies on TSMC to produce chips for the old mining machine.
In the mining machine industry, fabs not only control the supply chain of mining machine companies, but also affect the technical route of mining machine companies.
Lin Feng made an analogy, a mining machine manufacturer designing a mining machine chip is like a racing car factory building a high-performance racing car. There are two design ideas for racing cars:
One is to source the most powerful engine for the race car. Corresponding to the chip design of the mining machine, it is to use the most advanced process to design the chip. For example, the most advanced process in the chip industry is TSMC's 7nm process.
The second is to equip the racing car with the best tires, the lightest body, and the most scientific streamlined design, and work hard on every corner. Corresponding to the chip design of the mining machine, it is to use a fully customized method to squeeze out every trace of performance of the chip.
Apparently, changing the engine had an immediate effect on performance. However, the engine factory has the final say on who to sell the engine to and when to replace it, and the racing factory has nothing to do with it.
In the same way, in this regard, no matter how hard mining machine manufacturers try, it will be futile.
Therefore, in the case of the same technical process, it is the real skill of mining machine manufacturers to squeeze out every trace of performance of the chip. Whatsminer stands out from the encirclement by virtue of this.
"In terms of power consumption control, Samsung's 8nm is not only inferior to 7nm, it may not even be comparable to TSMC's 10nm." Lin Feng said, "However, Whatsminer's mining machine based on Samsung's 8nm is more efficient than Bitmain's 7nm-based TSMC's products in the same period." Strong, which means that Whatsminer is indeed technologically advanced.” (Note: In general, in the Xnm chip process, the smaller the X, the more advanced the process.)
At the same time, because Whatsminer adopts the lower-end process of 8nm, its cost is also lower than that of 7nm. In this way, backward technology has brought advantages in cost performance.
"It only took more than a year for Whatsmart to compete with Bitmain." Chen Lei said with emotion, "There is no fixed boss in the mining circle. At least in terms of parameters, the legendary Ant S19 and Whatsmart M30, as well as the The released Avalon A11 series are very powerful."
However, with the continuous development of chip technology, the ceiling of mining machine chips has become increasingly clear.
In the chip industry, compared with CPU and other products, the development difficulty of ASIC used in mining machine chips is not high.
"For example, Bitmain's early technical level was limited, and a lot of chip development work was assisted by a Taiwanese company called 'Creative Electronics'." Lin Feng pointed out, "For example, Yang Zuoxing can make a chip part-time. It is absolutely impossible for other chip industries.”
"Now each company is using the concept of full customization to make mining machine chips, and the process of the fab is not much different. The pure technology gap between mining machine companies should continue to narrow." He said.
A domestic AI chip practitioner even bluntly pointed out that all mining machine factories now "live on luck and work for fabs".
At the same time, the technological node innovation of the fab is becoming slower and slower, and the room for performance improvement is getting smaller and smaller. After 7nm, the mass production of 5nm chips may be delayed until 2021. It is becoming more and more difficult for mining machine chips to obtain large technological iterations.
In fact, mining machine manufacturers are well aware of this situation.
"The era of halving the power consumption of new mining machines is gone forever." At the mining industry summit in September this year, Yang Zuoxing said, "We expect that each generation of mining machines in the future can only achieve 10%- 20% performance improvement."
In his opinion, the update iteration of mining machines will slow down, and the life of a mining machine is getting longer and longer. Perhaps, this also means that the market space for mining machine manufacturers will become smaller and smaller.
The currency price has been sideways for a long time, mining output has been halved, and the performance of mining machines has been limited. The era of barbaric growth of the mining industry may come to an end, and the era of huge profits for mining machine manufacturers will also come to an end.
Canaan, which hit the IPO four times, finally succeeded in ringing the bell on Nasdaq.
* Some interviewees in this article are pseudonyms.
