This article comes from Cointelegraph, the original author: MARIE HUILLET
Odaily Planet Daily Translator | Yu Shunsui
Due to the increased competition, geopolitical pressure and slowing return on investment after Bitcoin halved in May, Bitcoin ASIC mining machine manufacturing industry is expected to be further integrated.
In the latest report of the crypto derivatives exchange BitMEX, “ASIC Hegemony,” the researchers wrote that they “think that it is likely that only 2 or 3 players will survive for a long time.”
The report analyzes the history and current status of the ASIC mining machine manufacturing industry, focusing on the current main players-Bitmain, MicroBT, Canaan and Ebang.
Application-specific integrated circuit (ASIC) refers to mining hardware that uses application-specific integrated circuit chips, whose chips are customized according to a specific hashing algorithm, designed to effectively mine cryptocurrencies. In contrast, using GPU devices is not very professional, so it has been difficult to compete with ASIC devices for network rewards so far.
Due to the rising capital investment costs of miners in the future, this has led people to worry about the centralization of various blockchains.
Therefore, as the BitMEX analysis shows, the integration between ASIC manufacturers means that the concentration of all levels of the industry continues to increase.
It is worth noting that the BitMEX report predicts that not only will the ASIC manufacturing industry continue to integrate, but also the mining operations will continue to integrate.
According to reports, in the first quarter of 2020 earnings conference call, ASIC manufacturer Jianan Yunzhi disclosed, “Even after halving, we see more and more inquiries, and it is a large number of large potential orders. Inquiry. We see more and more sales are key customers or major customers.”
The BitMEX authors say they have heard the same message from discussions with ASIC manufacturers MicroBT and Bitmain.
Reasons for internal integration in ASIC manufacturing
The BitMEX report shows that in the past 18 months, Bitmain’s market share (during the 2017 bull market, its market share was 75%) has begun to be eroded by new players such as MicroBT. It is estimated that the latter has a 35% market share in 2019.
Image source: BitMEX, ASIC mining machine market share by manufacturer (TH/s sold)
However, Bitmain is still the current “number one player”, despite “nearly funny, bad corporate governance in its executive power struggle.”
At the same time, competitor Jianan Yunzhi has been publicly listed, so its operations and earnings are more transparent, but BitMEX pointed out, “ASIC manufacturing is a cash-intensive and difficult industry, (and) in view of the technology of MicroBT and Bitmain Leading the way, if Bitcoin does not have a strong bull market, Jianan’s future path may be full of challenges.”
Like Bitmain, Ebang, which is seeking an IPO, faces “a relatively weak market positioning for product energy efficiency.”
Other factors affecting the industry include trade tensions between the United States and China, and the impact of COVID-19.
Elsa Zhao, MicroBT marketing manager, seems to confirm BitMEX’s assessment, noting that “the customer base is increasingly moving out of China. Because the investment return period is halving since the halving, according to the current mining difficulty and price, it is now necessary to It’s much longer than six months. At the same time, the average client size is now growing significantly. Clients are now bigger funds and no longer small businesses or individuals. Three to five years ago, there was only one leading company in this industry, some The top companies have been competing in the past year or two. But from now on, there will be 2 or 3 leading companies in this industry. After the halving of Bitcoin, the competition is getting more and more intense, only the most competitive mines To survive. It may be further integrated.”