Could Bitewei Become Bitmain’s Rival in the Future?
Bitmain is experiencing very hard moments due to different reasons. Some months ago, it was reported that Bitmain was going to launch an initial public offering (IPO). However, since that moment, there were different issues surrounding Bitmain’s profits.
Another important issue that clearly affected Bitmain was the fact that there are new competitors in the market. These are companies that are launching their own mining devices.
After a conversation with CoinDesk, Bitewei, a mining chip manufacturer located in Shenzhen, believes that it can be a good rival for Bitmain in certain areas. The company is led by Yang Zuoxing, former director of design at Bitmain. Bitewei has also raised 140 million yuan ($20 million dollars) in order to bring new mining chips to the market.
As per Tyler Xiong, COO of the mining pool Bixin, Bitewei’s mining chips could be ‘game changer.’
The company was founded in July 2016, and is considered one of the most efficient hardware manufacturers on the market. According to some tests performed by Bitewei, the next miner WhatsMiner M10 is 30% more efficient in terms of electricity consumption than Bitmain’s AntMiner S9 Hydro.
At the moment, the company received over 1,000 pre-orders of the Whatsminer M10. The product could officially launch on September 19. The average price of the miner is $1,600 dollars and the new product could generate a revenue of $1.6 million.
It seems that Bitmain controls between 80%-85% of the cryptocurrency mining hardware market. Additionally, it has several businesses such as BTC.com and Antpool, which are very important mining pools.
With other competitors such as Whatsminer, the industry becomes more competitive and could be potentially beneficial for the whole industry.
David Vorick, Obelisk’s CEO, said that Bitewei proves that competition is possible and that there should be more companies investing in the cryptocurrency mining industry.
“There should be a lot more players in the bitcoin mining space and a lot more manufacturers, especially if we can figure out everything that Whatsminer is doing to get the efficiency gains that they’ve been getting.”
However, Bitewei should prove that it is able to keep alive in an industry that has seen many companies go bankrupt even after offering competitive and high-quality products. The cryptocurrency mining industry is becoming more and more competitive since there are less than 4 million bitcoin left to mine.
The results of the Whatsminer M10 were very positive. In two rounds of testing results on August 10 and 25, Bitwei reported that the machine performs very well, consuming 66 to 68 watts of electricity per 1 trillion hashes (66W/TH).
This is quite important since Bitmain’s AntMiner S9 Hydro (it’s latest release) has a power consumption of around 96 W/TH.
Yang has also commented about the intention to launch a 7nm chip such as the ones launched by Canaan Creative and GMO Internet. At the moment, it is expected to see that in 2019.
Vorick says that Bitewei has now the majority of the design talent that Bitmain had in the past. This may be one of the reasons why Yang does not seem worried about the competition in the market.
Yang started in 2014 as a chip designer at ASICMiner, a bitcoin miner maker that was founded in 2012 by Jiang Xinyu. However, the founder of the company disappeared in January 2015 without any information about his decision.
Yang decided to present the full-custom chip design to Micree Zhan, co-founder and chairman of Bitmain. And indeed, this design became the Antminer S7. The benefits of using a ‘full-custom’ methodology such as the one adopted by Yang is that it allows a designer to maximize the chip’s output at the lowest point of power consumption.
Yang said that he decided to move from Bitmain’s office to Shanghai because he felt he did not fit in. He explained that he ‘didn’t feel respected.’ Jihan Wu, co-founder of Bitmain, agreed to offer him 2 percent of Bitmain’s equity. Zhan did not agree with it and offered 0.5 percent.
As things did not go well with Bitmain, Yang decided to end his contract in June 2016 and launched Bitewei one month later. And Bitewei was able to attract several Bitcoin enthusiasts and veterans. For example, the list of early investors include F2POOL’s co-founders Wang Chun and mao Shixing. Wu Ying, chairman of the investment firm China Capital Group was also present. At the moment, mao and Wang are now Bitewei board members.
However, there are some issues between Bitmain and Bitewei due to the fact that they are still arguing about the intellectual property of the designs made by Yang. Yang explained that Bitmain filed a patent infringement lawsuit against him because Bitewei adopted the ‘serial power circuit design.’
Yang answered explaining that serial power supply circuit designs were widely used and documented.
But things went worse for Bitmain. China’s State Intellectual Property Office (SIPO) decided to invalidate Bitmain’s patent on April 8. The SIPO statement on the matter reads as follows:
“If a technological solution sought by a patent has different characteristics than existing technologies, but such difference is public knowledge, then it is obvious the solution would incorporate this public knowledge.”
It seems that Bitmain’s issues with Bitewei are related not only to the patents, but also to its hardware and market pool dominance. Jihan Wu, Bitmain’s co-founder, has also supported the virtual currency Bitcoin Cash (BCH), born as a hard fork from Bitcoin. Because of it, the Bitcoin community considered him a persona non grata.
According to the research firm Alliance Bernstein, due to the fact that Bitmain supported Bitcoin Cash, the cash flow declined, and in the future the company could be more vulnerable in the market against competitors.
As pers some reports, Bitmain is the owner of 5.7 percent of the total BCH supply valued at $890 million dollars as of Q1 2018. However, since that moment, Bitcoin Cash has severely depreciated.
“Our miners’ market share may go above 50 percent. But our own hashing power will never go above 50 percent, in fact, 10 percent will be already good enough.”