Another "mysterious person" behind the Avalon mining machine

Author | Qin Xiaofeng

Editor | Lu Xiaoming

Produced by | Odaily Planet Daily

On November 21, Canaan Creative, the world's second largest mining machine manufacturer, rang the bell to go public on the Nasdaq in the United States.

It took Canaan six years to build the first ASIC mining machine in 2013 and finally go public.

Today, those who appear in the media spotlight are naturally Canaan’s founder Zhang Nangeng (Pumpkin Zhang) and co-director Kong Jianping and others.

In fact, in the early days of Canaan's development, there was a name that was always closely associated with it, and that was YiFu Guo (Chinese name unknown).

Several news reports, including Bloomberg, indicate that Guo Yifu may be one of the designers of the world's first ASIC mining machine, the Avalon mining machine. However, industry insiders told Odaily that Guo was only a seller of Avalon.

Perhaps only Pumpkin Zhang can answer the question about Guo’s true position.

However, the story between Yifu Guo and Canaan leads us to re-understand the early development history of this listed company from another perspective.

Resisting the concentration of computing power by understanding the small details

Back in 2012, Bitcoin mining chips went through several iterations in the early stages: from personal computer CPU mining and GPU mining to the era of field programmable gate arrays (FPGAs).

At the beginning of this year, Beihang University Ph.D. Zhang Nangeng was promoting his own FPGA mining machines - Icarus and Lancelot - on Bincointalk under the ID "ngzhang", and gradually became famous.

At that time, Guo Yifu was still an undergraduate student majoring in digital media at the New York University Tandon School of Engineering (NYU-Poly). However, this 22-year-old Chinese guy has already started researching Bitcoin mining machines, and he is also an early native on the Bitcoin forum.

(Guo Yifu)

"A lot of software has been developed, but there is no hardware. To truly mine Bitcoin, we need hardware." Guo Yifu began to modify the tablet computer so that it could mine, but the results have been unsatisfactory.

In April 2012, he came to China to investigate and find new directions for his mining machine research. It was during this trip to China that Guo met Pumpkin Zhang.

“In April, I finally got the chance to go to China to take the next step and logistically figure out what I needed to do to build this thing. It was there that I met one of my future co-founders,” he said.

However, neither of them expected that they would become comrades in the future and fight against mining hegemony together. What finally prompted them to unite was ASIC mining machines.

In June of that year, Butterfly Labs, an American institution specializing in the development of Bitcoin mining machines, announced that it was preparing to develop an ASIC mining machine with far superior performance to the mainstream FPGA mining machines at the time, and promised to deliver the first batch of ASIC mining machines in October of that year. Butterfly Labs also received a crowdfunding of one million US dollars.

“(ASIC mining machines) are exciting on the one hand because Bitcoin is making technological progress; but on the other hand, we are also aware of the potential risks: we cannot monopolize mining, which is not good for decentralization,” said Guo Yifu.

Guo’s idea coincides with that of Pumpkin Zhang. Both of them do not want to see the Bitcoin computing power being monopolized.

So, in September of that year, Pumpkin Zhang posted on bitcointalk announcing the development of an ASIC mining machine, and named the new mining machine "Avalon":

The first batch of pre-sales is 300 units, each priced at $1,299;

It is expected that the prototype will be successfully developed in December, mass production will start in January 2013, and shipments will begin in February;

If the first batch of reservations is less than 300 units, the project will be cancelled and the payment will be fully refunded.

It was also during this pre-sale that the name Guo Yifu officially appeared in the Avalon project. Pumpkin Zhang posted that overseas users who want to buy mining machines can contact Guo Yifu's email address.

Odaily Planet Daily found that during the same period, the Avalon team also established a company in the United States called BitSynCom LLC, which had only one manager, Guo Yifu.

(U.S. business registration information)

The company also opened an account in BitcoinTalk, which is operated by Guo Yifu and is responsible for the subsequent external sales and speeches of the Avalon mining machine.

At this time, there was only one month left before Butterfly Labs delivered the ASIC mining machine. Although many users were not optimistic about this emerging team, thanks to Pumpkin Zhang’s previous reputation and fame, the first batch of 300 mining machines were still sold out in advance.

"We are fully aware that our competitors will deliver this product next month. But that's fine because we are just making the chips and technology more widely used. We never thought about making it a real business." Guo Yifu said that the team did not intend to make a profit from the Avalon project at the time.

Everyone knows what happened later. Butterfly Labs missed its deadline and the delivery time was delayed again and again, which gave the Avalon team some breathing space.

Then Pumpkin Zhang dropped out of school to study mining machines, and finally developed the world's first ASIC mining machine in early 2013. The advent of Avalon also means that Bitcoin has entered a new era.

(Avalon's early ASIC production line in Shenzhen, China)

This year, Pumpkin Zhang was 30 years old. Guo Yifu was only 23 years old and had just graduated from college.

I became the person I hated

The happiest people at that time were undoubtedly the first batch of miners who received the Avalon mining machines.

Some people recovered their investment after just a few days of mining and continued to mine, while others chose to sell their mining machines at 10 times the price. The first batch of mining machines also made these early players a lot of money.

This also made Guo begin to reflect on whether his choice was correct.

In an interview with the media, he said that according to their expectations, Butterfly Labs and BASIC (another ASIC developer that ultimately failed to release) would be the first to release AISC miners. The launch of Avalon is only to prevent the concentration of computing power and provide other miners with an option.

“We wanted to sell chips so people could make their own miners and provide a hedge against a single entity becoming too powerful and then moving on to a new project. That was our main goal, we wanted to prevent this potential monopoly. As a result, we became the monopoly we were trying to prevent,” he said.

This is not just Guo's wishful thinking. In fact, Pumpkin Zhang has the same idea as him.

In April 2013, Pumpkin Zhang announced the termination of the sales of overall mining machines and focused only on the research and development and production of chips. He also open-sourced all hardware solutions except the chips of the Avalon mining machine online.

"The core value of Bitcoin is people's yearning for freedom, and Bitcoin mining should not be controlled by a few people," Pumpkin Zhang explained.

In addition, it is quite surprising that the Avalon team, which was the leader in computing power at the time, did not participate in mining activities.

“The Avalon team does not have its own mining department (except for the testing department)” said Guo Yifu.

This habit has been preserved to this day. In this year's US IPO prospectus, Canaan Creative stated that the company has never participated in cryptocurrency speculation or any cryptocurrency mining activities.

Although the Avalon team did several things that earned them a lot of reputation, they also faced some doubts at the time.

The first is the increase in the price of mining machines. The first batch of mining machines was priced at $1,299, but then the second and third batches of mining machines were priced higher and higher, at $1,700 and $6,900 respectively.

There were constant voices of doubt in the community at that time:

"Avalon took advantage of the situation."

“This is a monopoly. When the Butterfly Labs mining machine comes out, you’re done.”

…

Guo Yifu explained the increase in the price of mining machines. He said that the price of the third batch of mining machines is actually the same as the second batch, both are 75 BTC, but the price has increased due to the increase in the Bitcoin exchange rate; in addition, the fundamental reason for the increase in the price of the second batch of mining machines is the increase in the cost of mining machines. They need to purchase SMT machines (pick-and-place machines used to install devices on circuit boards) to produce the second-generation chipset.

“If we wanted to maximize profits, we could charge more. We had a lot of opportunities, like keeping the technology to ourselves or doing the mining ourselves, but that was never our intention. For us, it was always a question of ideals, not a question of business,” he said.

In addition, Avalon's delayed delivery of chips also caused public outcry in the community at the time.

In April 2013, Canaan Creative launched the fourth batch of pre-sales, and Pumpkin Zhang said that the chips would arrive 9 to 10 weeks after the pre-order.

Unfortunately, the chips were not delivered to the mining machine assemblers on schedule. These companies that were waiting for the rice to be cooked also went bankrupt due to overdue delivery of mining machines and eventually closed down.

(Condemning Pumpkin Zhang and Guo Yifu)

As for why the delivery was not on schedule, Pumpkin Zhang explained that due to the increased difficulty of mining and the advancement of production technology of other manufacturers, it was irresponsible to produce the first generation of chips again. This reason failed to convince everyone, because in July of that year, Canaan Creative sent a batch of 10,000 chips to Switzerland; at the end of August, another order for 20,000 chips was sent out.

As the matter gradually fermented, Guo Yifu stepped forward and offered a solution: At first, he said that the principal of users who pre-ordered before June would be refunded, but the community did not buy it. In the end, Guo Yifu announced that the principal of all users would be refunded, which would be the solution to the chip dispute.

Starting from July, Guo Yifu needed to respond to users' refund issues in the community every day, which lasted for 3 months.

(Response to question)

Quitting at the peak of his career, with other plans

One year after the successful development of Avalon, Guo Yifu gradually faded out of the Avalon team, but it was not officially announced to the public.

In the last Q&A session on Reddit in 2015, Pumpkin Zhang officially announced the fact that Guo Yifu had left, and bluntly stated that the two parties had no contact for a long time.

Why did Pumpkin Zhang try so hard to distance himself from the two, and why did Guo Yifu leave the Avalon team?

According to public information, the crypto market entered a cold winter in 2014, many crypto companies went bankrupt and mining machine companies were also in danger.

For Guo Yifu, cryptocurrency is more of a hobby, and he does not see it as his future career. In an interview with 99bitcoins, he admitted that he prefers traditional computer hardware development.

"I want to finish my tablet development. I don't like building services, I like building platforms and infrastructure. I want to build an open source tablet. Apple is convincing us that technology is expensive, when in fact they are selling a luxury product. I hope to drastically cut costs and offer a $100 tablet that is as good as a Nexus 7 in performance by eliminating all the middlemen. We can use manufacturing and engineering technology, and eventually we will have our own factory, so there will be very little overhead." Guo Yifu painted his dream blueprint.

In addition, the direct cause may be related to the CoinValidation project.

According to Forbes, at the end of 2013, Guo Yifu, Bitinstant's chief technology officer Alex Waters, and New York Republican Financial Regulatory Commissioner Matt Mellon established CoinValidation.

CoinValidation's main task is to request and collect the addresses of Bitcoin companies and users' transactions in accordance with US law, and store them in the database for analysis. If a user is involved in a contaminated (illegal transaction) address, they will report it to the regulator.

In simple terms, what Guo Yifu wanted to do was to eliminate the anonymity of Bitcoin and expose all transactions to regulation. This advanced view is difficult to accept even in today's crypto circles. At that time, it was even more unrealistic, and most players fiercely criticized the three.

Some players believe that if the plan is successfully implemented, it will greatly reduce the usability of Bitcoin and cause a split in the Bitcoin community.

Some players even speculated that Guo Yifu would design the Avalon mining machine so that the addresses mining through the mining machine could be monitored.

As a result, the three were also blacklisted by the Bitcoin community at the time.

This is probably why Pumpkin Zhang tried his best to distance himself from the two.

We don’t know where Guo Yifu went after leaving the Avalon team, and there are very few updates on his personal information on his social accounts. We only know that he still seems to be paying attention to the latest technological advances and the development of the crypto market.

He retweeted when TSMC announced that it was expected to deliver 5nm process chips in the first half of 2020; he also commented on problems with Ethereum community governance.

However, the number of people interacting on its social accounts always seems to be in the single digits.

postscript

To date, the relationship between Guo Yifu and Avalon has remained unclear in public information.

Cryptowiki said that Guo Yifu and Zhang Nangeng jointly manufactured the first generation of Avalon mining machines.

Guo Yifu’s personal LinkedIn account also shows that he was the co-founder of the Avalon project.

When selecting cryptocurrency millionaires, foreign media Bloomberg and Cointmr both mentioned that Guo Yifu earned more than one million US dollars by designing the Avalon mining machine.

(The first on the right is Guo Yifu, picture from Bloomberg)

Cross-verification of information from multiple sources seems to confirm that Guo Yifu is also one of the designers of the Avalon mining machine. However, some sources also stated that Guo was only the seller of the Avalon mining machine.

Guang Geng, an early participant in cryptocurrency, told Odaily Planet Daily that the main design team of the Avalon mining machine is Zhang Nangeng, Liu Xiangfu, and Li Jiaxuan, and Guo Yifu is the seller of Avalon.

The public account "Laodao News" agreed with this, believing that "the early Pumpkin Zhang was already a team with clear division of labor, and its US market was run by Chinese American Guo Yifu."

Of course, it seems unnecessary to delve further into this issue now.

To put it another way, even if Guo Yifu is indeed one of the designers of the Avalon mining machine, it is not that he has much to do with Canaan's listing today. Canaan's current status is not the result of one person. After all, without subsequent financing and development, Canaan would not have come this far.

But at least, Guo Yifu had been here.