
Bitmain, the largest mining hardware company, made around $4B last year - vthallam
http://coinsocial.io/2018/02/23/bitmain-largest-mining-hardware-manufacturer-made-around-4-billion-last-year/
======
kenneth
As an engineer, it saddens me to see the huge inefficiencies inherent to
cryptocurrency mining these days. Surely, when we're spending in the billions
on wasteful hashing, we could dedicate a small fraction of that to engineering
better consensus algorithms.

Unfortunately, we have an ecosystem where everyone is incentivized to ignore
the problem because they're too invested in maintaining the price of Bitcoin
and other PoW cryptocurrencies. They often don't pay for the externalities —
environmental costs. The specialization of mining also severely hurts the
distributed and decentralized nature of these crypto-currencies.

I'm a huge fan of crypto-networks, and have made a career in the space. But, I
want Bitcoin to die off and leave room for newer generation technology.

~~~
vernon99
This is a one-sided comment. There’s a lot of research going into different
variations of proof-of-stake. 4 out of 10 largest crypto (by market cap) are
PoS. There’s a lot of work Ethereum community (Casper), Cardano folks,
Tendermint etc are doing to create better consensus models.

~~~
nosuchthing
Proof-of-Stake statistically equates to "Give the rich more money".

Consider Ethereum's stats (and other similar PoS minting methods):

    
    
      Presale ICO / Premine ( max cost $0.50 USD per ETH  )
      = 72,009,990 ETH
      
      Total Supply today (Feb 23rd 2018)
       = 97,800,000 ETH
    
      Source:
      https://etherscan.io/stat/supply
    

Now imagine a financial system where all the wealthy have to do simply own
money (spawned from software or premine) to get more money. Or where voting is
done by merely by controlling a large sum of money/tokens.

~~~
zodiac
What's your proposal for a more egalitarian reward model for block producers
(in any consensus model)?

~~~
curyous
Proof of work, it requires continual investment if you want to get the
rewards, not just sitting there watching the cash roll in.

~~~
aoeusnth1
How is that more egalitarian? It's still a conversion between capital and
income.

It's like saying stocks that give dividends are more "egalitarian" because you
have to reinvest them in order to gain the same return on investment.

Absurd.

------
deyan
No sources cited. Random comments re: Nvidia and altcoins. Very poor article,
if we can call it that.

May I suggest this one instead [https://www.cnbc.com/2018/02/23/secretive-
chinese-bitcoin-mi...](https://www.cnbc.com/2018/02/23/secretive-chinese-
bitcoin-mining-company-may-have-made-as-much-money-as-nvidia-last-year.html)

------
oldcynic
Making and selling shovels seems to be still the best way to go then.

~~~
adventured
Not if you're very high on the food chain. It inverts there.

It's better to be Aramco, Exxon or Shell than Baker Hughes or Schlumberger.
Much less a lowely oil equipment maker (the shovel makers).

It's better to be the railroad (BNSF, etc) than the car maker (eg Greenbrier),
or really any other rail equipment maker.

Better to be the largest natural gas companies, than the fracking sand
provider (eg U.S. Silica), or the natural gas equipment makers.

It's better to be Glencore, BHP Biliton or Rio Tinto than the company that
makes the mining equipment.

It's better to be DeBeers than a diamond jewelry equipment maker.

It's better to be Pfizer or Merck than a company making various equipment for
big pharma.

It's better to be Intel than Applied Materials.

It's better to be Apple or Samsung than Foxconn or most any component maker.

It's better to be BMW, Toyota or Telsa than a parts supplier.

~~~
garyrichardson
Are these things true or equivalent? These areas are not necessarily booming.
They are stable with few consumers of the goods.

At this point, every scheming hustler is in the market for a bit coin miner.
Same in a gold rush -- any fool can dig with a shovel. It's not until boredom
or consolidation happens that the shovel maker margins start getting thinner.

~~~
wffurr
Better is to think of it as making something a lot of people want. Lots of
miners = lots of people who want shovels/ASICs. Whereas mature industries like
those end up as monopsonies i.e. a single buyer with lots of suppliers.

------
tlrobinson
Is that $4B worth of USD/CNY, or BTC?

If it’s BTC then a) the real figure is much lower because they can’t sell $4B
of BTC without drastically moving the market, b) what portion of that is due
to their BTC holdings increasing in value by more than 1000% in the past year?

Either way it’s still a lot of money, though.

~~~
wyldfire
It doesn't matter much what the denomination is. Most sane businesses would
convert to the currency of whatever their expenses are anchored in.

a) I think you're mistaken. $4B per annum is unlikely to move the markets
much.

~~~
IncRnd
> _I think you 're mistaken. $4B per annum is unlikely to move the markets
> much._

It sure will if you try to sell it. Holding it certainly isn't the issue.

~~~
wyldfire
The daily volume at the beginning of 2017 was $200M USD. The daily volume at
the end was $8T USD. $4B over 365 market days is somewhere between 1-4% of the
daily market.

If liquidating their bitcoin tanked the market in 2017, it wasn't too
noticable.

~~~
tlrobinson
I don’t think you can extrapolate liquidity from volume, especially when there
are exchanges with very low or zero fees.

------
jacquesm
> made around $4B last year

They're clever enough that they price it in USD and not in Bitcoin.

------
gesman
Selling showels to gold diggers is the best business model during the gold
rush

~~~
downrightmike
They also have about 28%+ of the whole network [https://qz.com/1053799/chinas-
bitmain-dominates-bitcoin-mini...](https://qz.com/1053799/chinas-bitmain-
dominates-bitcoin-mining-now-it-wants-to-cash-in-on-artificial-intelligence/)

------
UncleEntity
> The increased demand for special hardware like GPU’s and ASIC based systems
> has created a black market where hoarders buy the hardware in the market and
> sell for exorbitant prices on websites like E-Bay.

Since when is ebay considered the black market?

I always thought "buy low, sell high" was the ebay motto...

------
Gatsky
Bitcoin mining is a real world version of Keynes' quote about labour
productivity[1].

The important difference is that the money doesn't belong to any country, and
is transformed purely into personal wealth. This will lead to wealth
inequality the likes of which we have never seen. Governments should charge
miners a lot more for just existing, and using all the infrastructure the
public has funded to spin money out of thin air which will never help pay for
that infrastructure or contribute to any of the economic activity which keeps
a country going.

Why we let people dealing in financial instruments acquire so much wealth and
power continues to baffle me.

[1][https://en.m.wikiquote.org/wiki/Talk:John_Maynard_Keynes#%22...](https://en.m.wikiquote.org/wiki/Talk:John_Maynard_Keynes#%22The_government_should_pay_people_to_dig_holes_in_the_ground_and_then_fill_them_up.%22)

~~~
DINKDINK
"using all the infrastructure the public has funded to spin money out of thin
air"

In what jurisdiction[1] is electric-grid transmission and distribution
publicly funded? You're charged for the cost of your electric service.

[1] other than maybe communist or socialist governments

------
Cw67NTN8F
Let's just sit back and think... $4,000,000,000 in 4 years. or $50,000 for
80,000 families.

On the other hand, how come they are making 65% net margins? Where's the
competition?

------
forgingahead
What is the source for this claim of profits? I couldn't see any in the
article?

------
syassami
No sources?

------
jimjimjim
Well, those oceans aren't going to boil themselves.

~~~
sadgit
Conspiracy of the second law

------
pain_perdu
Why not create a coin awarded for proof of AI-modeling and open-up the network
to researchers? Seems like it would be a lot more productive if all that
processing power went to neural networks.

~~~
e1ghtSpace
Its called motocoin and it has kinda failed.
[https://bitcointalk.org/index.php?topic=1365986.0](https://bitcointalk.org/index.php?topic=1365986.0)
One person made a very good bot and took over and no one has made a better
one.

------
alexnewman
This can simply be explained with the fact that there's no competition.

------
gigatexal
I've moved to coins that are asic-tough

~~~
DaiPlusPlus
“ASIC-resistance” just means “needs lots of RAM”. Eventually someone will
figure out how to make oodles of RAM sufficient for a many-core custom
processor. Heck, modern SSDs (e.g. Intel Optane) might be fast enough to
replace DRAM for these kinds of applications.

Another kind of ASIC-resistance might be using dynamically-generated
algorithms employing self-modifying code. You’d have to own a Xeon Phi to get
good figures for that, methinks.

It’s a shame PoW is based on arbitrary hashing instead of, say, “Proof-of-
Folding@Home” - that would do some good at least, methinks.

~~~
Forbo
> It’s a shame PoW is based on arbitrary hashing instead of, say, “Proof-of-
> Folding@Home” - that would do some good at least, methinks.

It already exists, it is called Gridcoin and is based on Proof-of-Research.
Coins are awarded based on contributions to the Berkeley Open Infrastructure
for Network Computing (BOINC). There are many scientific computing projects
you can contribute processing power to that utilize the network.

------
ebbv
The people who did the best in the gold rush were the ones who sold
supplies...

------
KitDuncan
Mhm I wonder why non-mining altcoins are getting the most fud...

