
One Bitcoin miner is buying 20,000 16nm wafers from TSMC per month - guardiangod
https://www.dvhardware.net/article68109.html
======
blackrock
The amount of waste of Bitcoin Mining is incredible.

It is all about virtual digital mining, which is to race to find the first
hash, that has X number of zeros in the front of it.

And this burns an incredible amount of electricity. And all for what? Just to
show proof of work.

Can't there be a more useful usage of cryptocurrency mining to show proof of
work?

Something that is more relevant to humanity. Like protein folding? Or planet
hunting? Or pattern analysis? Or something else, that can be used to build an
AI brain?

~~~
lalaland1125
It is impossible to create a "useful" PoW. The issue comes down to incentives.
As bitcoin is a decentralized, trust-less system, there needs to be constant
and powerful incentives to prevent miners from cheating (by creating forks, or
executing any number of other attacks).

The current main incentive against cheating is that miners will lose their
invested PoW (compute time + electricity) if they cheat and get their block
thrown out. However, with a useful PoW, this calculus changes. Now, the PoW is
no longer "wasted" when the miner cheats and gets caught as the PoW is now
useful for something besides mining. This means that attacks are much cheaper
and much more likely to happen.

One interesting part about this is that you can consider PoW usefulness on a
sliding scale. The more useful the PoW, the more vulnerable your coin is to
attack. Thus, you can probably get away with a "useful" PoW if it isn't
actually very useful. This is one of the reasons why most "useful" PoW schemes
focus on something which is pretty much useless (such as finding weird primes
and whatnot).

~~~
yorwba
> The current main incentive against cheating is that miners will lose their
> invested PoW (compute time + electricity) if they cheat and get their block
> thrown out. However, with a useful PoW, this calculus changes. Now, the PoW
> is no longer "wasted" when the miner cheats and gets caught as the PoW is
> now useful for something besides mining.

So you spend $x on (compute time + electricity) to mine a useful PoW worth $y
outside the blockchain and an additional mining reward of $z. If you cheat,
you don't get to collect the $z reward. Although your original $x are not
completely wasted, you still only have $y instead of the $y + $z you could
have had.

How is that not incentive enough?

~~~
beaner
$y + $z must be greater than $x. If $y is money and $z is scientific
contributions... $y is most likely not something people are offering money
for. So in an open market its value is at or near $0. So $z by itself must
exceed $x.

To not care about the $z, $y must exceed $x by itself and that seems really
unlikely for the types of things that OP suggested instead of proof-of-work.

~~~
mygo
>If $y is money ... $y is most likely not something people are offering money
for.

 _scrathes head_

~~~
beaner
I think I was trying to be too smart and I got my variables confused.

------
guardiangod
From the article-

Bitmain, the largest Bitcoin miner on the planet, is now buying a whopping
20,000 16nm wafers a month from TSMC! That's double as much as in the previous
quarter and a _higher volume than what NVIDIA orders from TSMC._

Related material-
[https://www.gmo.jp/en/news/article/?id=764](https://www.gmo.jp/en/news/article/?id=764)

A competitor to Bitmain just finished their prototype 12nm Bitcoin mining chip
and is moving forward to their target 7nm mining chip.

~~~
JumpCrisscross
> _A competitor to Bitmain just finished their prototype 12nm Bitcoin mining
> chip and is moving forward to their target 7nm mining chip_

Huh, maybe the dark fibre of Bitcoin will be cheap silicon and subsidized fab
research.

~~~
PKop
Apply that to energy efficiency research as well. The monetary incentives are
too strong for it not to happen.

~~~
0x0
I don't think it's possible to be energy efficient in a proof-of-work
blockchain? Whatever energy saving you come up with will be negated by having
to match competing miners' increasing throughput. If you are not running on
100% you are losing out?

~~~
landryraccoon
You're thinking from the perspective of the miners.

From the perspective of the hardware manufacturers that's an advantage. If
you're making the hardware and you come up with a 10% energy savings, everyone
_must_ now replace their old hardware or be left in the dust. Hardware
manufacturers will make a killing. The prisoner's dilemma you are thinking of
only applies to the miners, it's a benefit for the parties selling them the
hardware.

~~~
JumpCrisscross
> _Hardware manufacturers will make a killing. The prisoner 's dilemma you are
> thinking of only applies to the miners_

Something something shovels in a gold rush...

------
medius
My wife and I were just talking about Bitcoin and I had this wild theory. This
is obviously BS, but I had fun exploring this idea. Here it goes:

What if Bitcoin/blockchain is a actually a strong AI? The AI manipulated
humans via lucrative mining to spend ever increasing amount of electricity and
other resources on running it. It's distributed and hence cannot be shut down
easily.

If there was an application taking up so much power and we didn't know what it
did, it would be pretty suspicious. So instead of trying to be secret, the AI
went public and promised wealth, no-regulations, etc. to humans to do its
bidding.

How else would you do it if you were a strong AI?

Maybe the things we know about blockchain is just the surface level. What if
all the hashes that are generated are part of code+data that runs and trains
this AI?

And hey, we don't know who Satoshi Nakamoto is and if that person is even
human.

Disclaimer: I don't have any background in encryption, crypto currency,
blockchain, have no stake in any *coin, etc. But I do love science fiction.

~~~
mike4921
I love it! For all the bad things bitcoin has brought, I have to say it makes
me feel like I'm living in a cyberpunk novel! Snow Crash...Neuromancer.... I
think people are focusing on all the negatives and overlooking all the
fascinating aspects of whats going on. The internet has basically
spontaneously created an interesting and suspicious technology. I think it's
really only been possible thanks to the increasingly effective and available
means of energy production, such that almost a consumer commodity.

Neal Stephenson, if you're reading this, this would make an amazing sci-fi
novel.

~~~
pbw
I think I've heard various sci-fi authors grousing it's hard to write these
days because reality is so sci-fi and outlandish (Trump).

------
Animats
On top of that, Etherium mining is eating the graphics board market. The price
of NVidia's higher end boards has doubled in the last six months.[1] Etherium
was supposed to require a general purpose CPU to mine, but now it's done on
GPUs with large RAM.

[1] [https://arstechnica.com/tech-
policy/2018/01/cryptocurrency-b...](https://arstechnica.com/tech-
policy/2018/01/cryptocurrency-boom-creates-insane-global-graphics-card-
shortage/)

~~~
21
I've bought a 1070 last year for machine learning and used it for a few days.

Now I don't know what to do: sell it since Volta will be a game-changer for ML
anyway, but what if when I will want to do ML again it will be impossible to
buy any card?

~~~
diimdeep
You could have run miner on it 24/7 when not doing other work, by this time
you could get price you paid more than 2x, maybe 3x

------
HN15718653
As a cryptocurrency-confused individual, I read articles like this and wonder
how I'm supposed to assign any meaning to the "value" being created here, and
by blockchain PoW in general.

So this company is buying a bunch of wafers... He's converting the value of
the wafers into value on blockchain, I guess?

Because I can't help but interpret these things as "some people are wasting a
lot of electricity, and you should pay them for it!" But, I'm open to a better
explanation.

~~~
gambiting
Why are banknotes worth anything? They are just pieces of paper with some ink
on them, after all. They are "worth" something, because people are willing to
do work or trade you stuff for them. The same with mining bitcoin - instead of
printing banknotes, you make a "thing" that you can then trade for services
and objects, because people want to have that "thing"(this part is crucial).
Most importantly, people are willing to trade that "thing" for real actual
dollars, and hence the mining craze.

~~~
Ologn
> Why are banknotes worth anything?

Until 1971 dollars were worth something because they could be converted into
one of the thousands of tons of gold bars the US stores at Fort Knox (and
elsewhere).

Then a magic wand was waved over the printing presses at the US Treasury and
they began to attain value for no reason. This magic has now spread to
Bitcoin, Ethereum, and even cryptocoins like Dogecoin, whose creator has
stated that the coin was created as a joke.

If the dollar never needed gold convertibility, why did they ever have
convertibility in the first place? Why does the government spend a lot of
money to store thousands of tons of unneeded gold at Fort Knox etc.?

There is a magic to the dollar - because if a panic ever causes its power to
wane too much, Trump only has to utter six magical words to let it regain its
power - "the convertibility window is open again".

How many thousands of tons of gold, governments, armies etc. stand behind
Bitcoin?

~~~
stephen_g
Convertibility has always been based on a fundamental misunderstanding of
money, and always fails because it's a flawed concept (and requires fixed
exchange rates, which is always a bad idea).

Money has always been based more on representing debt than actually having
intrinsic value (that misunderstanding comes from the barter myth, that pre-
money economies had markets that used barder, which there is little
anthropological evidence for - see _Debt: The First 5000 Years_ for a pretty
good overview).

As for now, the US dollar has a baseline demand because all business and
income in the US requires taxes to be paid to the Government in US dollars,
and all spending by the Government happens in dollars. The rest of the
domestic economy emerges out of that, just as market economies always have.
The value of the dollar is effectively ultimately 'backed' by the goods and
services produced by the US economy. Herein lies the problem with
convertibility - why would we expect that the amount of gold the Fed
corresponds to the size of the economy? It won't, so the value will always
diverge and hence how the system failed (more than once).

------
wmf
Note that Bitmain is mostly a hardware vendor, although they do mine using
their own equipment. Most of these chips will be sold to other miners, not
used by Bitmain themselves.

~~~
guiomie
I was wondering about this, why do they sell them instead of mining them? They
could sell the older model once the new chips they designed are ready no?

~~~
nimos
The % of the network they would control would be too high maybe? Fundamentally
the value of their product is based on the price of bitcoin. A single miner
that gets close to 50% might be seen a a huge risk and drive down the price.

~~~
jen729w
Let’s say some party/group gets 51%. Now they “own” the blockchain. Doesn’t
its value drop to 0, thereby making the whole effort pointless?

I’m not going to buy BTC (or whatever) from that system, therefore the owners
take no cash from it. Yeah they have all the BTC, but so what?

Everyone loses. What am I missing?

~~~
wmf
The movie plot here is to secretly get 51% of the hashrate, cash out a
billion-dollar fraud, then walk away. In reality it's unlikely to happen.

~~~
paulie_a
If that were possible, it would be a one time thing I am guessing. But it's
possible to short bitcoin now I believe. So ruining the network/reputation
could be profitable?

I am speculating and don't know for sure.

~~~
wmf
You probably can't short a large enough amount to make it worthwhile. Also,
due to Murphy's Law the price would probably go up.

------
sevensor
I mean, yes 20k is a big order, but to put that in perspective, it's at most
the output of one small production line for one month, and more likely they're
balancing it with other orders (and doing a ramp to verify the process before
going full bore). It's still a tiny fraction of the foundry industry overall.

~~~
esmi
Definitely a tiny fraction of the industry but also a tiny fraction of just
TSMC. For reference, they claim they did 10 million wafers in 2016.

[http://www.tsmc.com/english/dedicatedFoundry/manufacturing/f...](http://www.tsmc.com/english/dedicatedFoundry/manufacturing/fab_capacity.htm)

~~~
krasin
20k wafers / month = 240k wafers / year. So, 2.4%.

------
yitchelle
Just a thought, if we use even 1% of all computing power that is currently
being used for mining cryptocurrency, what can it be used to accomplished?

~~~
mmanfrin
Unfortunately, these chips are designed explicitly for the SHA algorithm BTC
uses. I wonder if there would be a way to make an algorithm based around
protein folding that could be verified like a hash?

~~~
PKop
[https://curecoin.net/knowledge-base/about-curecoin/what-
is-c...](https://curecoin.net/knowledge-base/about-curecoin/what-is-curecoin/)

------
karambahh
Has it ever happened before that a consumer of chips is among the largest
customers of what appears to be the biggest foundry in the world? (defining
"consumer" as "we actually use & run that chip, we don't embed it or sell
it"?)

~~~
monocasa
I've heard that Google has a decent amount of custom silicon too.

~~~
mehrdada
[I don't know about Google but] lots of people do relatively specialized
silicon. However, rarely that happens at the most advanced processes (i.e. low
nm).

~~~
monocasa
That's totally fair. Google's parts that I know about are security
coprocessors (like a TPM) that wouldn't really need the newest process.

They probably have NICs too that might make sense at that node though.

~~~
Cyph0n
Their NICs probably use off the shelf ICs from Broadcom or similar. In other
words, Google would only handle PCB layout and up.

Besides, modern analog ICs are usually fabbed using custom processes and in-
house lower node fabs.

Designing high-speed RF ICs is a huge effort, and as far as I know, Google
does not have such capability​.

~~~
monocasa
IDK, they're still actively supporting the LLVM backend for Myricom's LANai
chips, despite Myricom being sold off a few years ago.

And the NICs don't really need custom high speed RF, the foundry has a SERDES
block that'll work just fine for connecting to a phy.

~~~
Cyph0n
Yes, but what I was saying is that Google likely does not design the PHY
and/or other such low-level components.

I am trying to point out that designing a NIC is not equivalent to designing
custom ICs, _unless_ you are also designing the ICs used in the NIC.

~~~
monocasa
The PHYs aren't even on the same board for them; it's just SERDES going to a
connector.

[https://en.wikipedia.org/wiki/Small_form-
factor_pluggable_tr...](https://en.wikipedia.org/wiki/Small_form-
factor_pluggable_transceiver)

------
ttul
And to think back in 2011 we couldn’t get an investor to back us with the $1M
needed to produce just one BTC mining wafer.

How times have changed.

------
resiros
It seems these large players will do everything in their power to make sure
this bubble does not pop. I do not know the size of such investment, but it
seems to me that these players have the ability to keep the price from
crashing and keep the bubble from popping.

~~~
MatekCopatek
See, I had a different thought here. If anything, mining new bitcoins reduces
the value of current ones. Correct me if I'm wrong, but what's keeping the
bubble from bursting is more dollars coming in - big miners aren't doing that,
they don't buy their BTC.

Unlike a clueless average Joe at home, they're running huge businesses, as
this article suggests, so they're probably smarter. Does anyone know what the
math here is? I'm assuming a) they aren't cashing out too much/too regularly
because they're huge and this would drop the price too much and b) they aren't
stupid to make huge investments like this, just hoping all would be well.

Where am I wrong? Is the number of fresh "investors" still big enough for all
of them to have a steady cashflow? Do they believe they can get out before
everyone else? Are they just like all other believers, but with deeper
pockets?

~~~
totalZero
Mining new bitcoins makes transaction easier, which improves liquidity of
current bitcoins. That certainly should have a positive effect on the
theoretical value of a bitcoin.

~~~
contrarian_
> Mining new bitcoins makes transaction easier

No. As long as at least one person is brute forcing hashes, transactions will
be processed at the same rate of about 10 tx/s.

------
searine
Who makes money in a gold rush?

It's the guy selling shovels.

~~~
Someone1234
That was my thinking too.

There are a lot of replies in this thread talking about Bitmain like they're
the miner, when in reality they're the mining supply store selling miners the
shovels, hard hats, and so on.

Mining itself may be profitable, or it may not. But no matter what, the
supplier should come out with a fairly healthy profit if they play their cards
right.

~~~
icelancer
Maybe. The lead time on this stuff is not insignificant. It's not that simple.
Bitmain/Jihan understand that; they take a varied approach.

------
riku_iki
And these guys expect some ROI from this investment. When you buy bitcoin, you
now know where your money goes.

------
baybal2
With each year, I think more and more that the whole bitcoin thingy was
devised as an elaborate scheme to prop hash bruteforcing research.

Another crazy thing that pops in mind now is now long forgotten rumor that
Chiang is Satoshi.

~~~
sallyfour
There's no results on Google for Satoshi Nakamoto Chiang?

What's the rumor?

~~~
baybal2
That Morris Chang and co. came with bitcoin thingy to prop their sales knowing
that if btc takes off, they are guaranteed to get orders for hash crunching
machinery

------
gigatexal
So people with enough bitcoin can generate more bitcoin. Meh.

------
aphextron
The article is pretty light, are these whole wafers? What size?

~~~
wmf
Whole 300 mm wafers; TSMC doesn't sell partials AFAIK.

------
whataretensors
Anything that mentions bitcoin mining gets people worked up and negative for
some reason. More demand for compute is a good thing long-term. More demand
for video cards is great for all parallel computing long-term, hopefully
someone besides NVIDIA seriously moves into the space.

~~~
cesarb
> Anything that mentions bitcoin mining [...] More demand for video cards is
> great [...]

Bitcoin mining no longer uses video cards. More demand for bitcoin mining does
not translate into more demand for video cards.

------
zython
Bitcoin was mistake

------
paul7986
Is this going to help BTC’s price as it’s been falling past two days?

------
topspin
I suppose that at some point it's going to become economically feasible to
make integrated BPUs (...Bitcoin Processing Units...) and obviate the ASICs.

~~~
blattimwind
Bitcoin ASICs _are literally_ "Bitcoin Processing Units".

