2021 Bitcoin mining pools are in turmoil again. Will DCG lead the United States to challenge China successfully?

Wu said author | Colin Wu

Editor of this issue | Wu Talks about Blockchain

At the beginning of 2021, the quiet mining pool field has stirred up some movement. On January 15, Barry, the founder of Grayscale's parent company DCG, tweeted that Foundry will soon become the largest Bitcoin mining pool in the United States, and miners can join in February. It's time to bring Bitcoin computing power back to the United States! In addition, SBI, a Japanese financial giant that has always coveted the mining industry, will also deploy in the mining pool field. Its own mine is located in Texas, USA. The names of SBICrypto.com Pool and Foundry USA Pool have been released.

On January 26, Barry showed on Twitter that Foundry's hashrate ranking had entered the top ten, and the next goal was to be in the top five. The ranking on the 27th showed that SBI Crypto and Foundry USA, two overseas Bitcoin mining pools, entered the top fifteen mining pools in terms of hashrate, with SBI ranking 12th with 2063P and Foundry ranking 14th with 1375P. However, this data is still changing dramatically. Marathon also announced that it will launch a cooperative mining pool, investing 10E hashrate generated in the next year.

The Bitcoin mining pool industry has experienced the sudden rise of Binance Mining Pool in 2020. Will there be new entrants in 2021? At present, the probability is high. Reference: Boiling 2020: China's crypto mining industry has experienced great sorrows and joys. Next year, 600,000 new units may be added. The variable is Bitmain

DCG is the world's largest cryptocurrency investment group and is even considered the behind-the-scenes operator behind cryptocurrency. It owns the world's largest crypto asset management company Grayscale, trader Genesis and media CoinDesk. In addition, DCG is an investor in more than 160 companies around the world, including Coinbase, the largest exchange in the United States.

Foundry is a mining company under DCG and has become the fourth largest business directly under Grayscale. Although it was not disclosed to the public until August 2020, it claims to have been established in 2019. It mainly provides three services to the US mining industry: equipment financing and procurement; mining and staking; and consulting and advisory services; it has become one of the largest Bitcoin miners in North America; it has provided tens of millions of dollars in equipment financing to other mining organizations and helped purchase approximately half of the Bitcoin mining equipment delivered in North America this year. DCG has pledged to invest $100 million in Foundry. Foundry recently announced that it will host 14,000 mining machines in North America

According to The Block, Canadian listed company Hut 8 said it borrowed $11.8 million from Foundry to purchase 5,400 Whatsminer M30Ss. Foundry charged an annual interest rate of 16.5% for equipment financing for a period of 12 months, with the pledged mining equipment as collateral.

According to the Cambridge Global Bitcoin Mining Map, China's computing power is still 65%, and the United States ranks second at 7.2%. However, we should note that US listed companies have almost bought most of the new high-computing mining machines that will be produced in the future. Since these mining machine companies have almost publicly disclosed purchase information in order to boost their stock prices, we expect that by the end of 2021, North America's computing power may reach 20%-25%, and China's computing power will drop to about 50%.

The disclosed purchases of Antminers by 2021 include 100,000 from Marathon, 15,000 from Riot Blockchain, and 58,000 from Core Scientific. In addition, Shenma and Canaan have sold more than 100,000 mining machines to North America. This will increase North America's computing power by at least 20-30E in 2021. If this computing power is exclusive to Foundry, it may even surpass the current top mining pools and even come to the top.

Ideals are beautiful, but reality is cruel. Foundry’s success will not be that easy.

First, Foundry’s capital injection is 100 million US dollars, providing tens of millions of US dollars in financing, which can only purchase tens of thousands of machines. Most of the above machines are also purchased by the companies themselves. Therefore, it is not necessary to choose Foundry’s mining pool. Ant, Shenma, and Canaan, the three major mining machine manufacturers, also have cooperative mining pools; secondly, the choice of mining pool has no direct correlation with the region, and the core is still the fee rate. The reason why Binance Mining Pool was able to rise in 2020 is ultimately due to its 0-fee strategy. Although DCG is strong, it may not have much advantage in the face of exchange mining pools with higher profit margins and stronger ecological attributes. DCG is also unlikely to adopt the huge loss-making strategy of exchanges; finally, in terms of the familiarity and business capabilities of the miners, DCG, which has not been involved in it in the past, may not necessarily be able to compete with Chinese mining pools.

Another very important news is that on January 5, Marathon disclosed that it would cooperate with DMG's US subsidiary Blockseer to establish a mining pool. Marathon will put all its computing power (10.36 EH/s, or 7.6% of the total computing power of the Bitcoin network) into the pool in the future. This means that DCG may not get the computing power of the largest miner in North America. In addition, it is rumored that several North American companies are also considering independent mining pools, and SBI has also formed its own mining pool in the United States.

Therefore, it is predicted that by the end of 2021, Foundry Mining Pool may rank in the latter part of the top ten mining pools, and it is unlikely to enter the top five. The positions of the top five mining pools, F2Pool, Biyin, BTC, Binance, and Huobi are still difficult to shake. However, among the top fifteen or even the top ten, there may be multiple mining pools from North America.