Shenma saves itself, shareholders come to its aid

Editor's note: This article is from Fengchao Finance News (ID: fengchao-caijing), author: JX kin.

On November 13, Wu Gang, the founder of Bixin, revealed that MicroBT's Shenma mining machine will release a new machine M30S. People in the mining circle said that the performance index of this mining machine is 38 watts per terabyte, which exceeds the best-performing mining machine Antminer S17 series on the market.

MicroBT, a leaderless mining machine manufacturer, is using the preview of new products to prove to the outside world that "everything is normal." A week ago, the news that the company's founder Yang Zuoxing was "taken away by the police for investigation" spread throughout the industry.

Just after Wu Gang disclosed the news of Shenma's new mining machine, rumors spread that this Bitcoin evangelist nicknamed "Starry Sky" in the currency circle would take over the Shenma mining machine business. However, he later clarified in his circle of friends that he was just a shareholder and "was willing to go through fire and water to help his brother."

MicroBit used its products to save itself, and its shareholder Starry Sky spoke out to help. Three days later, Bitmain, which was seen as a challenge to MicroBit, also announced that the Antminer S19 chip had been sent to TSMC for wafer production, and the performance index of the Antminer S19Pro could reach up to 30 watts per terabyte of computing power.

The competition between the two manufacturers in terms of product performance is in full swing. Another mining machine manufacturer, Canaan Creative, is likely to be listed on the Nasdaq on the 21st of this month.

In November 2019, a series of events in the mining circle seemed like a prelude to a change.

Two mining machine manufacturers launch new product competition

"Shenma shareholder and BiXin Wu Gang announced in the employee group that he would take charge of the Shenma mining machine business." On November 14, after the founder of MicroBT Yang Zuoxing lost contact, the currency circle self-media "Wu Says Blockchain" revealed the latest developments of the Shenma mining machine manufacturer.

Soon, Wu Gang clarified in his circle of friends, "I am just a shareholder brother, and I am willing to go through fire and water to help my brother." He used two "very" to emphasize the stability of Shenma's operations and the normal iteration of its products.

Wu Gang clarified that he is only a shareholder of BitMicro (picture from the Internet)

Among Bitcoin believers, Wu Gang is regarded as an "ancient god-level figure" and an industry "veteran" who has known and mined Bitcoin since 2010. He is more famously known as "Starry Sky". Domestic Bitcoin enthusiasts respectfully call him the "Gandalf" of the industry.

In 2014, Wu Gang founded Bixin, whose businesses include wallets, mining farms and investments. As he said, he is indeed a shareholder of MicroBT.

Qichacha shows that Wu Gang holds 7.21% of the shares of Shenzhen BitMicro Artificial Intelligence Partnership (Limited Partnership), the main company of Shenma Mining Machine, ranking only behind the founder Yang Zuoxing, who holds 75.35% of the shares. As the second largest shareholder, Wu Gang does not hold a specific position in BitMicro.

Just one day before it was rumored that it would "take over the Shenma mining machine business", Wu Gang also revealed in his circle of friends that MicroBT will release a new Shenma mining machine M30S using an 8nm chip, and also released a QR code to join the group to "get the latest news first-hand".

"Wu Says Blockchain" also mentioned Shenma M30S, which is said to have a performance index of 38 watts per terabyte of computing power. Currently, the Antminer S17Pro, which has the best performance index on the market, has a performance index of 39.5 watts per terabyte of computing power. For miners who are burdened with high electricity costs, machines with lower computing power and energy consumption are more attractive. People in the mining circle believe that from the perspective of indicators, if the M30S is mass-produced and launched, it may become the market position of Bitmain's Antminer.

With the help of shareholders, MicroBT used the preview of new products to convey the message that "everything is normal" to the outside world, and also revealed its fighting spirit to challenge the giants.

Soon, news about Bitmain’s “new chip” also appeared. On November 16, “Wu Says Blockchain” broke the news again that Bitmain’s next-generation mining machine S19 chip has been sent to TSMC for wafer verification and will soon be returned for wafer verification. S19 will use TSMC’s 7nm technology, and “S19PRO’s performance index can reach up to 30 watts per terabyte.”

The competition between the two mining machine manufacturers is becoming increasingly tense.

Shenma shareholders were once involved in disputes with competing companies

As a shareholder, it is understandable that Wu Gang supports the investment company. Industrial and commercial information shows that he invested in MicroBT in November 2017. At that time, it was the starting point of the Bitcoin bull market, mining machines were scarce, and the market price of an Antminer S9 mining machine had soared from 13,500 yuan to more than 30,000 yuan.

Wu Gang used real money to support Shenma Mining Machine, but was also involved in the patent infringement dispute between Bitmain and MicroBit, which also laid the groundwork for Yang Zuoxing to be taken away by the police for investigation. From 2015 to 2016, Yang developed mining machine chips for Bitmain, but left because of a failed equity negotiation.

In 2018, Bitmain sued MicroBT and its CEO Yang Zuoxing for patent infringement, demanding that they stop producing mining machines and compensate for economic losses of 2.6 million yuan. Also named as a joint defendant was Beijing Biranrushi Network Technology Co., Ltd., which is also the main body of BiXin and of which Wu Gang is the founder.

Wu Gang once said in his WeChat Moments that BiXin was jointly sued because the mine hosting used Shenma mining machines, and Shenma used the series power supply patent. "This is a patent dispute and has nothing to do with BiXin directly."

Wu Gang said that the dispute between the two mining machine manufacturers has no direct relationship with Bixin (picture from the Internet)

On August 31, 2018, the Urumqi Intermediate People's Court, which heard the case, rejected Bitmain's lawsuit against BitMicro and BiXin on the grounds that "the validity of the patents involved is in an uncertain state."

This civil lawsuit from Bitmain once led to the closure of BiXin's mining farms, and the cloud computing power could not be delivered to customers who had already purchased it. BiXin had to provide a refund plan, refunding users the original price and compensating them with 12% interest.

This also once again affected Wu Gang's view of Bitmain founder Wu Jihan. Even earlier in August 2017, when Wu Jihan supported the forking of BCH from BTC, Wu Gang was negative about his approach. Despite the different philosophies, according to him, Bixin still hosted Ant S9 mining machines for Bitmain, which lacked mining farms, in 2018.

A lawsuit may have caused Wu Gang's favorable impression of the mining machine giant to decline again. At the end of October, after Wu Jihan "iron-fisted" the executive director of Bitmain, Zhan Ketuan, he was removed from the company. Wu Gang did not mince words on Weibo, "Xiaohan, whether it was BCH or Bitmain, used coup tactics, but he failed to seize power in BCH."

With the past grudges piling up, MicroBit is now facing the crisis of temporarily losing its founder again. Wu Gang’s declaration of “sticking his neck out for his brothers” seems even more intriguing.

Former employees "surround" mining giant

After the Shenma mining machine encountered this disaster, supporters included not only shareholder Wu Gang, but also Zhu Yu, the founder of Biyin Mining Pool, Wang Ruixi, the founder of Hufu, and others.

"Starting a business in the mining industry is quite risky. Not only do you have to run the company well, but you also have to prevent your former employer from calling the police to arrest you." On the evening of November 8, Wang Ruixi's WeChat Moments post also became the starting point for the news that "Yang Zuoxing was taken away by the police."

Yang Zuoxing founded MicroBT, and Shenma Mining Machine began to emerge. In October last year, when announcing the acquisition of US$22 million in financing, Yang Zuoxing said that MicroBT's sales in the first half of 2018 were US$186 million and its profit was US$48 million.

In September this year, the media Carbon Chain Value reported that MicroBT, which had only more than 80 people at the time, had revenue of US$700 million in the third quarter of this year. Shenma Mining Machine is eating into the market of Antminer.

Zhu Yu, who started a business in the mining pool field, is also a former employee of Bitmain. Pan Zhibiao, who was also in charge of the mining pool business, later joined the CoinIn mining pool. As a new force in the mining pool field, CoinIn's recent computing power once ranked first in the entire network, and is currently ranked second with a computing power close to that of BTC.com under Bitmain.

In the past month, the computing power of the CoinIn mining pool ranked second in the entire Bitcoin network

Coincidentally, Pan Zhibiao and Zhu Yu were also sued by Bitmain. In June this year, Bitmain sued its former employees and co-founders of the CoinIn mining pool, Pan Zhibiao, Zhu Yu, and Li Tianzhao, for violating the non-compete agreement, requiring Pan Zhibiao to pay $4.3 million in compensation. At that time, Pan Zhibiao's lawyer believed that Bitmain's promise to pay Pan $2,780 per month in compensation after his resignation was not paid on time, and therefore, he believed that the non-compete agreement was invalid.

The talented people who left the giant mining companies eventually stood on the opposite side of their former companies, and each of them set up their own business areas in mining machines, mining pools, and other business areas that Bitmain also owns, and they seem to be encircling the company.

On the other hand, Bitmain's old rival Canaan Creative's pace towards listing is becoming clearer and clearer. It is reported that it will officially land on the Nasdaq on the 21st of this month, and some people even posted invitations to participate in the bell ringing.

Last Friday, Canaan Creative updated its prospectus again, announcing an issue price range of US$9 to US$11 per share. It will issue 10 million ADSs and expects to raise up to US$110 million.

With old rivals taking the lead in the capital market and new rivals competing with each other on new products, Bitmain, which is constantly suffering from internal friction, urgently needs Wu Jihan to regroup, and the new generation of Antminer is particularly critical.

No one can be number one forever. In November 2019, various companies in the mining circle were plagued by incidents and smoke, which seemed like a prelude to a change.