The State of the ASIC market
The State of the ASIC market
Historic low prices, diminishing efficiency gains and latest trends
A while ago The Bitcoin Mining Block Post, published an article about ASICs. Elaborating on what aspects to look into when you consider purchasing mining hardware. Over the last year a lot has happened in the world of mining machines. The bear market diminishes demand and efficiency has become key. Today’s newsletter will look into the current state of the ASIC market and the latest trends. This article was written in collaboration with Kaboomracks.
In this publication I will dive into a wide range of topics:
Historic Low Prices
Increasing hashrate output per miner
Increase in efficiency is slowing down
Chip size is reaching its limit
Premium for most efficient machines
Is the premium worth it?
Is the S9’s still alive?
What to Expect for 2023?
Intel Entering the ASIC Market
Are hydro-cooled mining machines the future?
Bitmain continues to dominate the market
Bitmain’s Firmware Upgrade Improves Efficiency
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Historic Low Prices
The bear market caused mining machines to fall in price drastically. ASICs with an efficiency of under 38 J/TH & 38 - 68 J/TH are at the lowest levels we have seen in history. The older generation hardware with an efficiency of 68 J/TH or above, are near all-time lows.
The question begs, how low can ASIC prices go? The eventual bottom we will only be able to establish in hindsight. But with a 87,5% decline from the all-time high, the bottom should be near. The machines will not go to zero. Newer generation machines will only be sold under cost of production if a mining company is in distress. If Bitcoin goes much lower in price, it is unlikely that the machines will show the same rate of decline percentage-wise. Currently there are resellers in the market who do not want sell for a loss. They are sitting on their stock waiting for better times.
Increasing Hashrate Output per Miner
In the image below you can see the history of Bitcoin miners that came to market. The chart shows all the notable ASICs released over the last 10 years. On the Y axis the hashrate output (TH/s), on the X axis the release date and a colour code for the power efficiency (J/TH).
Most of the machines with an efficiency of under 38 J/TH were released as of 2021. In 2022 the majority of the new machines released, exceeded the 112TH/s of the Whatsminer M30s++. This model was the most efficient miner in 2020 and the bigger part of 2021. Looking at TH/s 2022 there are three outliers (top right). These are all water-cooled machines: the S19 Pro Hydro (198 TH/s), M53 (226 TH/s) and the S19 XP Hydro (255 TH/s).
Increase in Efficiency is Slowing Down
Since the production of the first ASICs in 2013, the efficiency of miners increased tremendously. Mining machines are able to produce more and more hashrate, using less and less power. However, the increase in efficiency (J/Th) is has started to flatten out and expectations are that this will continue in the coming years.
Chip size is reaching its limit
The reason for this slowing increase in efficiency, has to do with the reduction of chip size reaching its limits. The most efficient miner produced by Bitmain, the S19 XP, has a 5nm chip. The first model they released used 55nm chips (more than 10 times bigger in size). The smallest chip in the world at the writing of this article is 2 nm. Several companies are currently developing 2-nanometer chips. It is unclear if these will be used by ASIC miner manufacturers. A chip of that size is so small, it is difficult to see with the naked eye. It is also be very difficult to produce as even the smallest manufacturing errors would be magnified.
Premium for Most Efficient Machines
For the last few months the most efficient machines, especially the S19 XP’s, have been selling at a premium. There are various reasons why miners pay a higher price for the most efficient hardware:
The higher the efficiency, the higher its margins. This is particularly important during times of low hashprice. Higher efficiency makes miners more resilient to a further drop in BTC price, a decline in hashprice and to rising electricity rates.
Rack-space is still scarce. To optimize the amount of hashrate per rack it is more desirable to deploy a XP or M50. In some cases, S19 Pro’s and M30’s are unplugged to make room for their bigger brothers.
Demand for XPs is increasing in the U.S. while there is very little inventory available for sale at this moment. There are a lot of S19’s and M30’s floating around. Manufactures are not incentivized to produced more efficient machines and halted production.
It is expected that the latest models will retain value for a longer time.
Is the premium worth it?
Should you consider buying the most efficient machines and pay a premium for them? Let’s compare the Return Of Investment period of different models. For this calculation I took an average costs $/TH from various resellers on Telegram. I assumed two electricity rates: $0,06 kWh and $0,08 kWh. The hashprice as of writing of this article (January 10 2023) was at $0,064/TH/Day.
Looking at the above scenarios one can conclude that if electricity rate is high and your margins are very slim, it does make sense to pay a premium. If you have access to a rate of $0,06 kWh cheaper and less efficient ASICs have a shorter ROI period.
Is the S9’s Still Alive?
The S9 is cherished by a lot of miners, especially OG’s and home miners. Coming to market in 2016, the machine sold a lot because of its reliability and lack of competitive machines at the time. At a certain point in the 2018, the S9 dominated the network producing almost 80% of Bitcoin’s total hash rate.
Current market conditions are rough. The S9’s cannot compete with more efficient hardware in this low margin environment. The percentage of hashrate coming from S9s dropped below 2% in November of 2022.
It is not expected that the S9 will make a huge comeback and dominate the network anymore. But the machine is still used by home miners, miners that reuse the heat it produces and miners working with wasted energy. Also a lot of S9’s have been shipped to Venezuela. This country is the last destination of many mining machines because energy is so cheap that S9’s are still profitable.
What to Expect for 2023?
At the time of writing this article, there were no new SHA-256 ASIC miners releases announced by manufacturers. There were quite some models that hit market over the last year. As market conditions are harsh, it is expected that rather than new series being launched the below models will continue to be deployed in 2023:
Mar 2022: iPollo B1L (60 TH/s)
May 2022: Bitmain Antminer S19 Pro+ Hydro (198 TH/s)
Jul 2022: MicroBT Whatsminer M50 (114 TH/s)
Jul 2022: MicroBT Whatsminer M50S (126 TH/s)
Jul 2022: MicroBT Whatsminer M50S+ (138 TH/s)
Jul 2022: MicroBT Whatsminer M53 Hydro (226 TH/s)
Jul 2022: Bitmain Antminer S19 XP (140 TH/s)
Oct 2022: Bitmain Antminer T19 Hydro (145 TH/s)
Oct 2022: Bitmain Antminer T19 Hydro (158 TH/s)
Oct 2022: Bitmain Antminer S19 Hydro (158 THs)
Oct 2022: Bitmain Antminer S19 XP Hydro (255 TH/s)
Nov 2022: Canaan Avalon Made A1346 (110 TH/s)
Nov 2022: Canaan Avalon Made A1366 (130 TH/s)
Dec 2022: Bitmain Antminer S19j Pro+ (122 TH/s)
Jan 2023: Bitmain Antminer S19 Pro Hydro (177 TH/s)
Intel Entering the ASIC Market
At the 2022 edition of the International Solid-State Circuits Conference (ISSCC), tech giant Intel announced they want to challenge Bitmain and MicroBT by launching their own ASIC. The second-gen Bonanza Mine ASIC (BZM2) was brought to market as just the chip, without the housing, control board, fans, PSU etc..
BLOCK, Argo Blockchain, and GRIID Infrastructure were the first to work with the chips. Intel had other large customers from the start but these wanted to remain unnamed. Hive Blockchain (HIVE) build a new mining rig built using Intel chips, called the Hive Buzzminers. Hive claims to be the first major public mining company with an in-house designed ASIC miner deployed using the Intel chip.
There is very little information out there on the performance of the Intel chips in practice. Reason being that the chips are mostly sold to private companies and there are strong NDA’s in place. It remains to be seen if the ASIC can live up to the 148 TH/s at 3860W with a power efficiency of 26W/TH, which Intel was promoting.
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Are Hydro-Cooled Mining Machines the Future?
Over the last half year various liquid cooled ASICs came to market. Both Bitmain and MicroBT launched hydro or hyd models. Only a few companies deployed these water cooled miners. What do we know so far?
The machines can produce a lot of TH/s which allows for a high density per m3. The hydro versions are also more efficient than the air-cooled miners of the same series. The high control over the atmosphere allows you change many variables in the system to optimize efficiency. Noise level of the hydro-cooled miners is very low.
On the flipside, the build-out of the infrastructure is expensive. The high CapEx is a barrier to many companies. As the technology is very new, there are very few proprietary containerized solutions. Miners are often obliged to purchase the Antspace container from Bitmain. With all the tubes there are a lot of possible points of failure. Finally, the system requires a lot of water. Access to enough water of the right quality is key.
Bitmain Continues to Dominate the Market
It is hard to find exact numbers about the market dominance of Bitmain. One thing is for sure, they are still the number one manufacturer when it comes down to miners produced and sold. Kaboomracks estimates that around 80% of miners in the market are manufactured by Bitmain. The S19 series is by far most popular amongst their customers.
The dominance of Bitmain is quite remarkable because their S17 model had a lot of issues due to its poor quality. MicroBT benefitted from this and the m20 series saw bigger sales number in comparison to the S17. Bitmain managed to recover from this unsuccessful series of machines by putting out the popular S19 series.
The powerful position of Bitmain does have a downside. The manufacturer does not always takes the user friendliness for miners into consideration. Sometimes Bitmain sends out mixes batches of machines. These vary in TH/s and types of control boards. Even hash boards of the same model can vary in size, making it difficult to replace. This inconsistency makes it challenging for miners to standardize their operations.
Bitmain’s Firmware Upgrade Improves Efficiency
December last year Bitmain came with an announcement that they have a firmware upgrade for their S19 Pro series. The power efficiency would improve by 13,6%, from 29,5 J/TH to 25,5 J/TH. This brings the efficiency of the S19 Pro’s very close to the XPs which operate at 21,5 J/TH.
There is still a lot of unclarity about this firmware. This is what we know so far:
The upgrade is only for those Pro models rated or 29,5 J/TH.
It runs on Amlogic, Beaglebone and Xilinx control Boards
It allows for an underclock, a low power mode to consume less power but improve the J/TH. Hashrate is about 20% lower but the ASIC runs at an efficiency of 25.5 J/TH.
First impression is that it is more of a marketing campaign than a trend that will highly impact the industry. It remains to be seen if the upgrade impact the use of custom firmware like Braiins and Vnish. It is unclear if a similar upgrade is going to be rolled-out across other Bitmain models and what MicroBT will do in response. Current market conditions might stimulate an widespread low power mode amongst miners. If done en masse this could lead to a decline or slowdown in growth of network hashrate.
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