Competition among the 4 Major Chinese Crypto Mining Machine Manufacturers

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Since the birth of cryptocurrency, in part from its "anarchical endorsement" feature, it has been subject to attacks, but despite difficulties, cryptocurrency has grown rapidly for 10 years. The current price of Bitcoin has exceeded $50,000, rising 150% in the past 3 months. If an industry lacks government support but still develops rapidly, it shows that the industry has deep-rooted and unshakable robustness.

Cryptocurrency functions as a kind of "general equivalent," a global asset that is not restricted by time or place. After 2 rounds of cryptocurrency bull markets in 2013 and 2017, the world has generally accepted cryptocurrencies. It is likely that the 4-year crypto bull market will set a new high again in 2021 or 2022.

(Photo Source: BINANCE Trading Platform)    

Mining Industry Ecosystem

In contrast to the banking financial system that relies on a centralized supervision system, the essence of cryptocurrency is a decentralized electronic cash system. Each transaction record forms an "account," and the processed accounts form a page of accounts called a block. Obtaining bookkeeping rights through competition is also commonly known as cryptocurrency "mining."

Mining machines, mining farms, mining pools, and cloud-hashrate platforms form the ecosystem of the digital currency mining industry. Among these varied providers, mining machine manufacturers design and produce mining machine chips and assemble them into machinery and equipment to sell to the miners. The mine itself provides mining places conducive to mining success (such as temperatures and lower electricity prices). The mining pool participates in mining through the same hashrate of the unified miners to obtain a higher probability of mining. The cloud-hashrate platform sells hashrate to entities willing to participate in mining through integrated mining machine resources and makes profits through the identity of the mining resource market maker.

(Source: Leadleo Research Institute)

Hashrate, or the ability to mine bitcoins, forms a central part of the mining ecosystem. The faster the mining speed of the mining machine, the higher the hashrate and the more bitcoins are mined.

Comparison of major manufacturers and models

Mining machine manufacturers find themselves upstream of the industry chain because they engage in research and development activities and sales of mining machine encryption chips.  Actions of mining machine manufacturers affect miners and other downstream participants in the industry and can even cause dramatic changes in the entire digital currency industry. 

The main players in the market include Nasdaq-listed AGM Group Holdings AGMH, Ebang International Holdings EBON, Canaan Inc. (CAN) and the unlisted Bitmain and MicroBT. These firms conduct blockchain chip and mining machine research and development. Currently, only AGM, Canaan, Bitmain and MicroBT manufacture mining machines. These 4 manufacturers and the high-end ASIC mining machines they have developed come with their own advantages and disadvantages, as follows:

Canaan launched a new model, the Avalon A1246, in September 2020, with a hashrate of 90TH/S, a wall power consumption of 3420W and a power efficiency ratio of 38J/Th. The 1st Avalon model to reach 90T, A1246 is not competitive in its hashrate and its power efficiency is relatively inferior to that of models launched by other competitors. It costs $5,118 in August 2021. From the perspective of the company's strength, Canaan was listed on the Nasdaq in November 2019 and became the 1st mining machine listed in China, but it seems to have fallen behind in its technology innovation and level of research and development, so the cost-effectiveness of the mining machine is low.

The S19 Pro was released by Bitmain at the end of February 2020. The performance has been greatly improved compared to previous models. The hashrate is 110 T±3%, the wall-power consumption is 3250W±5% and the power efficiency ratio is 29.5J/Th. It adopts a double-tube design, and dual fans are connected in parallel at the front and rear to exhaust air and dissipate heat. With the increase in the price of Bitcoin, the price of the mining machine has risen from more than $1,538.5 in mid-2020 to $8,597 in August 2021.  Bitmain had serious infighting that negatively affected the company's mining machine business. When it hit the Hong Kong Stock Exchange in 2019, the listing failed due to the expiration of the prospectus.

MicroBT successively launched 5 mining machines with different hashrates In April 2020. The chassis of MicroBT's Shenma-Mining machine adheres to a single-tube design. Among them, the hashrate of M30S++ reaches 112TH/s, the power consumption is 3472W and the power efficiency ratio is at 31J/Th. The hashrate of M30S++ and the energy consumption ratio are excellent, but the price is higher at $9,477. MicroBT's market operation is relatively weak, and most of its sales are mainly domestic distribution. A large gap exists in the overseas market, and it has been reported that insufficient production capacity and arrears with mining machines has slowed production.

AGM also launched a high-power mining machine in August this year. The KOl-C16 with a chip adopts SMIC's N+1 process, the overall computing power is 113TH/s, the wall-power consumption is 3400W and the power efficiency ratio is 30.9J/Th, which surpasses the best level in the industry. These qualities not only mean higher income under the same market but stronger anti-risk ability. According to calculations, even with the current hashrate of the entire network, the C16 mining machine currency price is as low as $6,000. Taking into account the decline in the hashrate of the entire network in a bear market, the safety margin is high and the machine can withstand currency price as low as $3,000 to $4,000, which is only 1/10 of the current price in August 2021. The market positioning of AGM's C16 mining machine is public information, and its customer base of primarily Canadian and American institutions makes it even safer. It is not expected to be affected by Chinese regulatory policies since it has a larger overseas market advantage compared with other competing companies.

A good mining machine is not only affected by the strong profitability of a bull market but also by bear market anti-risk behavior. The mining market is in an era of large hashrate. Only a mining machine with more than 100T hashrate can reduce the impact of currency price fluctuations on the mine. These 4 high-end mining machines are all large-power hashrate mining machines, and they have strong competitiveness as a whole.

China's ban on crypto mining marks a rare strategic shift for energy-rich countries such as the United States, Canada, Russia and Central and Western Asia. These high-end mining opportunities are expected to be closely watched and machines continuously purchased by large-scale listed mining companies in the United States and Canada, as well as major powerful mining companies. As manufacturing order levels are publicized, competition among these 4 companies will settle out.  Manufacturers that can capture overseas markets will greatly increase market share in the end.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.