After a nine-month delay and an investment of $ 3.8 million, an emerging manufacturer is ready to produce its first batch of new and powerful machines for mining ethereum and ethereum classic cryptocurrencies.
Linzhi, based in Shenzen, China, said Wednesday that it had ordered 37 wafers from Taiwan Semiconductor Manufacturing Company, the main parts that will allow it to build around 200 application-specific integrated circuit miners (ASICs).
These sample units will test if the machines can explode as efficiently as they are designed to use using ethash, the work test algorithm used in ethereum and ethereum classic.
The test units, if successful, would mark an important step towards mass production, as Linzhi intends to compete with manufacturers of general-purpose computer chips, such as NIVIDA, as well as with specialists in mining equipment Bitmain and InnoSilicon , which do ASIC miners for the ethash algorithm.
Approximately five million ether (ETH), the native cryptocurrency in the ethereum network, is extracted every year, which, at its current price, is worth more than $ 800 million. Even for the classic ethereum, which maintains the original ethereum ledger before a hard fork in 2016, approximately nine million native ETCs are extracted each year, with a value of more than $ 60 million.
Linzhi was founded in February 2018 by Chen Min, former chief of chip design at Canaan Creative, maker of bitcoin miner Avalon. Chen told CoinDesk that the new company fully financed itself with approximately $ 4 million as initial capital.
Announced the plan to produce ethash ASIC miners in September 2018 with the ambition to overcome the efficiency of most existing equipment. Chen’s target specification for Linzhi’s ASHA ethash miner is set at 1400 mega hash per second (MH / s) with an electricity consumption level of one kilowatt hour.
To put those figures in perspective, the NVIDIA GTX TitanV 8 card is now one of the most profitable equipment in the ethash algorithm, capable of calculating 656 MH / s at a level of energy consumption of 2.1 kWh, according to the profitability of the pool pool miner f2pool index,
With the current price of ETH ($ 180) and the difficulty of the network, as well as an electricity cost of $ 0.04 per kWh, each GTX TitanV 8 would bring home a daily profit of $ 7.35. Similarly, if one uses the same GTX TitanV 8 card to extract ETC, which has a lower price and a lower mining difficulty than ETH, the daily gain would still be around $ 6.70.
The total computing power that competes in ethereum and ethereum classic to compete for block rewards and secure the two networks is around 160 and 13 tera hash per second (TH / s), respectively.
Since the announcement of his plan, Linzhi has spent almost all of his initial capital on research and development of the chip design, the operations of his team of twelve people and the order of the first batch of wafers, to bet the sample test units will deliver the expected mining power.
Linzhi said earlier that his goal was to order the first batch of wafers around December to have samples ready in April and mass production in June.
Speaking of the delay, the company said:
“We underestimated the complexity of the chip and how long it would take to grow the team and make the company functional. We are cautiously optimistic that we can just move forward the rest of the schedule, which would mean 12/2019 for sample machines and 02/2020 for mass production.”
A possible business risk is that the ethereum community has previously voted to activate the so-called ProgPow algorithm to eliminate the advantage that large miners maintain that expensive and specialized chips can afford, although the timing for that change has not yet been decided. (Eventually, ethereum developers want to move from the job test to the participation test, which would eliminate mining altogether.)
When asked if Linzhi has any Plan B if the change occurs, Chen said the company is, in fact, more active in the ETC community, adding:
“Our plan A is to focus on ETC mining. So, if ETH will remain an option, it is a good thing to have. In the ethereum community, the ProgPow plan still has some uncertainty. At the moment, we don’t see it as a market we will get, so I really don’t care so much. “
In a possibly contradictory move, Chen said the company plans to adopt what it calls a “reverse discount” strategy when it starts accepting pre-orders if the sample units prove successful. That would mean that the more you buy, the more likely you will pay.
The reason is to discourage any entity from buying too many machines and thus concentrate power on the network.
While Linzhi has not yet decided on the final price of each unit that will be sold in advance orders, he says the goal is to achieve a four-month investment recovery period for individual miners with a relatively small number of orders.
“This is our effort and contribution to the idea of decentralization,” Chen said, concluding:
“Our sales will go to developers and community first, with a focus on geographical distribution, and potentially with a malus [reverse discount] for large orders. This means that small orders by individuals would be priced to hit the 4 month [return of investment] and larger orders would pay more.”
Mining equipment image via CoinDesk archive