Bitmain, the world’s leading cryptocurrency mining company, has seen a huge $300 million profit in its first four months of 2020. This greatly alleviates fears of a “collapse” in the Bitcoin mining industry caused by the Bitcoin Halving – which effectively reduced miner’s revenue by half. Bitcoin mining is a multi-billion dollar industry and is set to be one of the most profitable sectors in the cryptocurrency space. Find out more about Bitcoin mining in our guide.
In an Industry blog, Wu Said Blockchain, first reported the news after Bitmain told their staff internally of the around $300 million profit. As a reward for their hard work, Bitmain employees received big Labour Day bonuses totaling 7,000 Yuan (around $9,900).
Quite what prompted these gains was not revealed but the reports suggested that a large part came from ventures not pertaining to cryptocurrency mining. The main area is in Artificial Intelligence (AI), a field they entered in 2018.
Since then, Bitmain’s AIs growth has been fast and they have launched chip designs that companies can use to power their AI systems and software. The blog post mentioned a large order of their AI chip BM1684 which was said to be worth “millions” and seemed to suggest it could account for the large profit windfall.
That is not to say that Bitcoin mining has taken a back seat. Bitmain has also opened four new mining farms and has seen a hash rate increase in its other pools. However, the headlines following Bitmain in recent times had painted a vastly different picture of life inside the company and its economic health.
Bitmain’s Losses and Internal Disputes
Earlier this year, reports came out claiming Bitmain was in serious strife and were set to lay off 50% of their staff amid concerns about Bitcoin’s May halving. The company had already cut staff in 2018 and with market share decline evident in 2019 many felt Bitmain would become a tragedy of the “crypto winter”. Performance problems from their mining rigs, like the Bitmain S17/T17 Antminer, only seemed to compound their issues.
The most notable problem though was Bitmain’s internal conflicts between the top tier staff. The two founders and CEOs of the company, Jihan Wu and Micree Ketuan Zhan have been at loggerheads for months.
Leaks in early 2019 had suggested Jihan Wu was set to give up his CEO position and take a limited role in the company. Yet, in October 2019 Wu made the shocking decision of ousting his longtime partner Zhan, who was Chairman of Bitmain at the time. In an email to staff, Wu told his employees to cease all contact with Zhan and that he was back to save the company.
Zhan has filed two lawsuits against Bitmain and the AI subsidiary, which is called Fujian Zhanhua Intelligence Technologies. The disgruntled former senior executive is looking for a way back into Bitmain and released a statement saying: “I will fight for her [Bitmain] till the end with legal weapons. I won’t allow those who want to plot against Bitmain to succeed. If someone wants a war, we will give them one.”
The case continues but for now it would seem that Wu has the upper hand, especially with business doing so well at Bitmain.
The cryptocurrency mining and hardware production company Ebang has just filed for a $100 million USD initial public offering with the US SEC. This filing not only shows the there is a market for Bitcoin mining, but that the industry in high demand. Ebang’s annual revenue is $109 million last year, despite falling cryptocurrency prices. The annual production of Bitcoin is worth $3.5 Billion USD at current Prices. Miners need new hardware as new chip technologies, such as those produced by Ebang, is both more powerful and energy efficient. In 2019, 82% of Ebang’s revenue came from application-specific integrated circuit (ASIC) chips.
Moving to 10nm production is expensive
One of the reasons for Ebang going public is to move to even more advanced technology and production techniques. In chip manufacturing, moving to smaller node sizes, such as 10nm makes the miner more powerful and power efficient. Ebang’s new mining chip, the DW1233 is independently developed and based on the new 10nm production process.
Although the Bitcoin price started to recover in the second quarter of 2019, our operations generally lag behind the increase of Bitcoin price.
Ebang Press Release
Failed IPOs and Second Chances
This is Ebang’s second attempt at an initial public offering, after they failed to file for an IPO with the Hong Kong Stock Exchange (HKEX) in 2018. The initial IPO was not granted by the HKSE after 6 months of application, indicating it was not accepted by the HKEX. This time around Ebang has a smaller raise of $100 Million USD as opposed to the first filing, which valued the company at $1 Billion dollars.
Cryptocurrency mining ecosystem
Large cryptocurrency mining hardware manufacturers have all been seeking Initial Public Offerings as a method to raise capital for expansion. Part of the reason is the growing market Bitcoin and cryptocurrency ecosystem.
2020 is a huge year for Bitcoin mining. Huge changes to the mining ecosystem – changes that will spark another “gold rush” for mining. This will be spearheaded by two factors – the release of new more efficient mining hardware known as ASICs and Bitcoin halvening. The release of new hardware will give new players a bigger advantage in mining due to the efficiency factor – new ASICs generate more hashpower with less power. (https://www.sliderrevolution.com) We’re already seeing large funds like Fidelity Investments building large mega-watt mining facilities in North America and other continents. You can hare about the North America mining explosion in this podcast. This marks the return of mining as a major investment opportunity this year.
Table of Contents
Cryptocurrency Mining is a $6 Billion+ USD per year industry
Sizes of Exchange, Mining, DeFi and ICO industries respectively
One well-kept secret of the mining industry is the huge profits being generated by cryptocurrency miners (Bitcoin, Ethereum, DASH and Monero mining). Let’s start off with an industry Fact – every day $19,000,000+ USD dollars worth of cryptocurrencies are being produced by miners across the world. This means a total of $6.8 Billion dollars will be mined in 2020 alone. The biggest currency being mined is Bitcoin – with a 1,800 bitcoin being produced per day totalling to a value of $15,833,340 USD. To put everything into perspective, the ICOs only raised a total of $371 Million in 2019 according to icodata.io. Mining is currently the second largest industry behind exchanges (source: Bloomberg).
Miners upgrading and replacing older hardware (often confused with “miner capitulation”)
Ironically the miners have perpetuated myths such
as “mining is not profitable” or “the bitcoin mining death spiral” to deter
new players coming into this profitable space. Many reports in 2019 have
featured erroneous calculations that Bitcoin mining is not profitable. This is
because researchers have incorrectly assumed that miners are getting
expensive commercial electricity costs of $0.07-12 cents per kilo-watt
hour. This is far from the truth – mining operations receive considerable
discounts as they purchase low priority power (meaning they will get cut off
grid in the event of a surge in power usage). The actual figure is in the range
of $0.01 – $0.03 per kw/h. This means miners are generating large amounts of
profit. It is the biggest industry in the blockchain space, and yet it is
surrounded by both mystery and false information.
New
Hardware (ASICs) is game changing
New high efficiency Bitcoin mining hardware is coming in 2020 will be a huge game changer. Bitmain will be releasing the new Antminer s19 based on the 7nm manufacturing process. Competing ASIC manufactures are also making new chips, with Innosilicon and Canaan hot on the heels. This die shrink increase the hashpower of chips whilst reducing power consumption at the same time. These two factors mean these new units will be more efficient – the biggest factor contributing to Bitcoin mining profitability.
Hashr8 – New MiningOS
New operating systems dedicated for mining cryptocurrencies such as Hashr8 are also being launched this year. These OSes will make it easier for commercial, enthusiast and retail miners to improve mining efficiency and management. This is a huge positive trend for the industry as a whole as it makes professional tools mainstream and accessible to the general public. This will level the playing field and reduce the gap between large-scale miners.
DASH mining is the process of generating new cryptocurrency using specialized mining machines known as “ASICs”. This guide teaches you the basics of DASH mining and how to set up your ASIC. DASH miners are specialized machines designed to solve the “X11” hash function used to protect the DASH network. When a miner finds a hashed result that meets the network difficulty requirements, it is submitted to the DASH network. Once verified, the miner will be rewarded in DASH cryptocurrency, thus generating an income for the mienrs. In order to mine DASH, you’ll need to get an ASIC. It’s no longer possible to mine DASH using CPU or GPU (unlike Monero or Ethereum mining).
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What is DASH
DASH (also known as Xcoin, Darkcoin) is a form of digital currency that is not controlled by any government or individual entity. DASH is based on Bitcoin technology, with some major differences between:
Anonymous transactions – DASH transactions are anonymous, so it is impossible to trace the source of DASH funds. This offers significant privacy benefits for DASH users.
Instant confirmation – Masternodes instantly confirm DASH transactions, whilst Bitcoin transactions take 10-30 minutes to confirm.
Low fees – DASH transaction fees are significantly less than Bitcoins or any other bank for that matter.
X11 Algorithm – DASH mining uses a different algorithm called X11.
How Profitable is DASH mining
Daily Revenue from mining rewards differ everyday – this is because mining difficulty changes and hence the daily reward. Revenue is dependent on the power of the Graphics Processor Unit (GPU) involved, with higher Hashrates being faster and more profitable
Network difficulty- Think of it this way, every day the same wage gets paid to all the DASH miners in the world.
The value of DASH– The current USD value of DASH is important for those seeking profits in fiat currency (USD) or even Bitcoin (BTC).
What is X11?
X11 is a chained hashing algorithm that uses 11 different hashing algorithms to secure the network (hence the “11”). The algorithms Blake, BMW, Groestl, JH, Keccak, Skein, Luffa, Cubehash, Shavite, Simd and Echo are used in sequence, repeated one after another until the very last function. This will give a final hash value which is then submitted to the blockchain if it meets the difficulty requirement. X11 is designed by Evan Duffield to improve the security of the blockchain. The reasoning is that if one of the algorithms are compromised, there are 10 others to continue to protect the network.
The second reason X11 was designed is to make it harder to create mining ASICs (although we know that this is now possible). For a period of 2 years, it was possible to mine DASH using a conventional computer via CPU and GPU mining. However, this is no longer the case as chip makers have found ways to create high specialized X11 ASICs.
DASH Pool Mining
There are two main ways to mine DASH – solo mining or pool mining.
Pool Mining (working together)
Work with others to mine and share rewards
Get paid per share, on a hourly or daily basis
Less random / dependent on luck
Pools take some fees (0.5-3% depending on pool)
Solo Mining
You mine the entire block reward (3.11 DASH per block) – no pool fees
Random Chance and probability – you can go days or months without rewards
Not viable if Hashrate is low – single GPU will take years to mine a block
Generally speaking, pool mining is the preferred method for most miners. This is because it provides a reliable stream of daily income, rather than large random bursts. Thus it allows miners to better calculate their profits and losses.
List of top DASH mining Pools
There are 2 factors to consider when picking a DASH mining pool – the location of the pool and it’s market share. The top priority would be location – the closer the pool is to you geographically the better. This is because sometimes due to network latency, shares that are mined could be “stale” – as new blocks are created rendering older blocks obsolete. It’s also important to know that Chinese servers are behind the Great Firewall of China, meaning that connections could periodically break. This means that choosing a server with low latency and close geographical location would give the highest yield.
The second factor is the market share of the pool. The larger the market share, the more consistent the rewards. This is because blocks are continuously mined by the pool, and hence they can pay out at a consistent rate. This reduces the impact of the randomness of block creation.
We recommend finding a pool close to your location with a high market share.
In 2020, DASH Cloud mining contracts are not profitable. This is because mining has become more competitive with lower margins – forcing miners to reduce costs. Cloud mining is hit the hardest because of they have large overheads like advertising spends and legal costs. In our latest research, we found that cloud mining providers were charging 184% for the same hashrate than home-made solutions.
What else can I mine with X11?
When you purchase a DASH miner, you’re limited to mining the X11 algorithm. X11 algorithm can mine coins such as Smartcoin, Pura, and Hatch. Admittedly, there are not many other good coins to mine using X11 ASICs, with DASH being the most valuable of the bunch. This is unlike other algorithms such as SHA-256 which is used in Bitcoin mining, Bitcoin cash and BitcoinSV.
Masternodes vs. Mining
There are two was to make a passive income on the DASH network – mining and masternodes. Like miners, masternodes also generate a DASH reward every time a block is created on the DASH network. The reward distribution is as follows:
45% – Miners reward
45% – Masternode reward
10% – DASH treasure (DASH DAO – Decentralized Autonomous Organisation)
As you can see, masternode node holders get equal amounts of rewards as miners. In order to become a masternode, a total of 1000 DASH must be staked by the node holder. At the current price of $60 per DASH, this means a total of $60,000 must be staked in order to gain masternode rewards.
The function of masternodes is to provide additional layer 2 services to the network. This includes sending pre-approved transactions (InstantSend), improving security of the network (Chainlocks) and privacy features (PrivateSend). The 1000 DASH required by the masternode serves as collateral to ensure good behavior. If the funds are moved or spent, the associated masternode will go offline and stop receiving rewards.
The biggest factor in deciding whether to mine DASH or getting a DASH masternode is the financial commitment factor. The advantage of a masternode is that the 1000 staked DASH can be fully returned at the end of operation, whilst mining equipment will become obsolete over time. In addition, masternode holders are given the right to vote in the DASH treasury which gives funding to future developments. The disadvantage of masternodes is the high initial investment, which cannot be less than 1000 DASH.
