A peek into the Bitcoin miner’s 2020 Interview with BTC top’s Jiang Zhuoer

After a tumultuous 2020 that continued into Bitcoin ( BTC ) setting new all-time highs in 2021, Bitcoin miners are facing a bittersweet scenario — profits have skyrocketed, but multiple issues prevent them from buying more devices and boosting Bitcoin’s hash rate. According to the founder of major mining pool BTC. Top, Jiang Zhuoer, global electronics supply chain issues are having their effect on the mining industry as well. Speaking with Cointelegraph, he said:Recently, car manufacturing giant General Motors shut down some of its plants due to the inability to source chips. Other carmakers have seen similar shutdowns in recent months as well. The shortage of mining devices can be easily seen in Bitcoin’s hash rate. Since the halving in May 2020, Bitcoin’s hash rate has increased from about 92 million terahashes per second to its current reading of 166 million, an 80% increase. Bitcoin’s price, on the other hand, increased from $9,000 to over $46,000, a gain of over 400%. Bitcoin’s hash rate has a relatively straightforward correlation with price. Barring new technological advances, increases in price should be closely mirrored by increases in hash rate. While the rate of new devices coming online should lag behind the price in bull markets, the hash rate has remained relatively stagnant in the past few months. This means that current miners are seeing much higher revenue for individual devices, which, added to the shortage, results in inflated unit prices for ASIC miners. According to ASICMinerValue, obtaining a Bitmain S19 Pro right now costs about $9,000, while its official price is less than $4,000. According to Jiang, the mining industry also saw major issues in 2020 due to Bitmain’s internal power struggle. “The indefinite delay of the Ant mining machine S19 in June, July and August 2020 caused us a lot of difficulties. We underwrote our customers according to the shipment period and used our own machines to make up the revenue to our customers,” Jiang said. With the Bitmain saga being resolved in favor of Micree Zhan , there should be no more specific issues with purchasing the company’s miners. Despite the variety of issues, 2020 was also a pivotal year for the Bitcoin mining industry due to the release of new-generation ASIC devices with improved energy efficiency. The industry leaders were the Bitmain Antminer S19 Pro and MicroBT Whatsminer M30S+ series. Publicly listed manufacturer Canaan also released new miners such as the AvalonMiner 1166 Pro and the liquid-cooled A1066I unit . The new miners offered significant efficiency gains, primarily due to their more advanced chip lithography. The S19 Pro uses 7-nanometer chips, while the M30S+ uses 8-nm lithography. The measurement indicates the distance between two ends of a transistor on a chip — at these values, it is just a dozen atoms wide. Lowering the distance helps increase computing performance and reduce power consumption. Jiang explained that the Bitcoin mining industry is currently experimenting with TSMC’s 5-nm process, while the chip manufacturer is already researching 3-nm lithography. A reduction from 5 to 3 nm would be a major achievement for the computing industry, as it would allow to pack roughly 60% more transistors in the same chip. But according to Jiang, the latest advancements in chip technology are hitting some fundamental physical limits:The practical result is that newer chips will have better computing performance but are unlikely to carry as strong improvements in energy efficiency, Jiang said. “Bitcoin mining actually does not require high computing; it requires a better power efficiency — that is, the less power you consume with the same hash power, the better,” he added. Other types of performance improvements like liquid cooling can be useful but do not radically alter the miner’s efficiency. Jiang explained:The vastly inflated revenue for miners comes as the global electronics industry is under intense pressure. Normally, new devices would quickly fill the gap and bring down the average revenue to mean values. The current chip shortages mean that this outcome may take longer than usual to occur, but existing devices are still being sold at a significant-enough premium to make prospective buyers consider their actions twice. For example, the S19 Pro currently has a return-on-investment period of eight months based on the electricity price of $0.04 per kilowatt-hour. However, if its revenue were to collapse to the still-high levels of December 2020, the miner would need to work for up to 40 months to pay itself back. In the three years that the miner could potentially require to turn a profit, new devices could make the S19 partially obsolete, prolonging the payback period even further. Still, according to Jiang, the mining industry could be heading for consolidation around state-of-the-art devices, with only marginal improvements over previous generations. This would improve the lifetime expectation for mi