The past decade of mining: the road from GPU mining to 7nm mining machines

Since Satoshi Nakamoto mined the first block, mining has been around. From 2009 to 2019, mining has been developing for a full ten years. In the past ten years, mining has grown from nothing to something, witnessing the blockchain industry from humbleness to glory. Between ups and downs, mining has also experienced a change from "geeks" to "CXers" and then "upstarts" in the public's impression. Today, it may become "sooner or later, it will be cold". The ten-year wealth myth of mining has not fundamentally changed the perception of ordinary people, probably because blockchain is still a little far from life.

The Internet once created a global bubble at its inception, but this does not prevent the Internet from changing our lives. The reality is that regardless of public attitudes, the existence of mining is reasonable. If this "existence" still shows vigorous vitality, then we have reason to believe that it may be a trend.

1. The road to industrialization of mining

Today’s mining industry seems to be booming. In fact, since Satoshi Nakamoto mined the first “genesis block” on January 3, 2009, the mining work has been undertaken by Satoshi Nakamoto’s personal computer alone for the next one or two years. No one could have imagined that the mining industry with an annual output value of tens of billions would come from such a “casual” origin.

1 ) The road to professionalization of mining machines

Mining is essentially a process of continuously performing hash collisions on computer chips. Initially, a PC could be a mining node, but later it was discovered that using a computer's GPU for mining was more efficient. This stage is called the pan-miner stage, where the mining medium is a computer, and anyone can become a miner.

Strictly speaking, the first mass-produced machine designed for mining was born in Shenzhen in 2013. The model was "Baked Cat 12.8G", and the first generation of mining machines was launched. In September 2013, the world's first ASIC Avalon 1 began to be delivered, using a 110nm process chip. At the end of the same year, Bitmain's first generation ASIC mining machine Ant S1 was mass-produced.

Mining machines began to become truly specialized, and the overall pattern of the mining industry was basically determined in this year. Afterwards, under the influence of Moore's Law, professional mining machines continued to evolve, and today, 7nm process mining machines dominate the market.

2 ) The first batch of professional miners appeared

Also in 2013, the world's first mining farm was launched in Gongming Street, Shenzhen. Wang Song used the FriedCat mining machine to realize batch mining operations and named it the "FriedCat" mining farm. The machine, which only occupied half a room, accounted for 42% of the computing power of the entire network at that time.

The completion of the FriedCat Mine marks the birth of the first generation of miners who rely on the income from mining machines. Of course, the first generation of miners are also the developers of mining machines. There is also a group of investors behind the FriedCat Mine, who rely on the income dividends of the mine to obtain a considerable return on investment. It can be said that the first batch of investors in the mining industry already existed at this time.

The formation of professional miners can be traced back to a later time. Between 2014 and 2015, miners began to realize that electricity costs were the key to the success or failure of the mining industry. Miners began to look for cheap energy around the world. After comparison, Sichuan Electric Power had the best price and volume. Miners began to migrate, which is the origin of Fengshui Power, which we are talking about today.

The discovery of Fengshui power has caused mining profits to soar, and miners' ability to resist risks has become unprecedentedly strong. Whether or not to master high-quality power resources has become the threshold for miners, and mining has truly become a profession.

3 ) The emergence of surrounding service industries

The most intuitive way to judge whether an industry is formed is to observe whether the service industry that parasitizes it is sound. The surrounding service industry of the mining industry consists of two parts: one is the channel that serves the commodity circulation of mining machine manufacturers and the other is the mining pool that serves small and medium-sized miners.

It is reported that the earliest mining pool appeared in Prague, the capital of the Czech Republic, in 2010. Given that the computing power of Chinese miners accounts for more than 70% of the total computing power of the entire network, mining pools serving mainland miners seem to be more representative. F2POOL, established in April 2013, is the earliest mining pool in China and once had the largest computing power in the world.

The time when mining machine dealers appeared is a little difficult to verify. Shenzhen Huaqiangbei SEG Plaza is the world's largest mining machine distribution center. At the latest by 2015, SEG Plaza had a dedicated mining machine sales store. The peak period of mining machine dealers was from the end of 2017 to the beginning of 2018. At the peak period, the entire fourth floor of SEG Plaza was filled with stores selling various models of mining machines.

The industrialization of mining relies on the advent of professional mining machines, takes shape with the emergence of professional miners, develops in the process of mine migration, and finally solidifies with the growth of surrounding service industries.

In terms of time, 2009 was the first year of mining, and 2013 was the beginning of the industrialization of mining. Many of the influential figures in the industry today started their own mining journey in 2013.

Pumpkin Zhang (founder of Canaan Creative), Wu Jihan (founder of Bitmain), Mao Shixing (founder of F2Pool), Zhuang Zhong (head of btc.com), etc. all emerged in early 2013, and this group of people are intricately connected to each other and can be linked together through certain people or things.

It took four years from 2009 to 2013 for the mining industry to take its first step. In the following six years, the mining industry has expanded at a speed no one could have imagined. Today, the mining industry has become a mature industry with an output value of hundreds of billions and supports 100,000 practitioners.

2. Challenges in the history of mining

The mining industry is developing rapidly, but that does not mean it has a smooth road ahead or a smooth road ahead. In the past ten years of growth, the mining industry has encountered many challenges, even on the verge of life and death, with the survival of the industry hanging on a thread.

1 ): The first 51% attack in history was achieved, almost shaking the foundation of the mining industry

The POW consensus has always been proud of its high security, and the "one person, one vote" system is also a right that miners have always been proud of. However, there is still a sword of Damocles hanging over the mining industry, that is, the 51% attack.

When an individual controls 51% of the total network computing power, it means that they can use the consensus system to do whatever they want. Before 2018, the weakness of the 51% attack only existed in theory.

In September 2018, another set of Equihash algorithm that also used the POW mechanism was successfully attacked with 51% computing power, and some data that had been written into the block was maliciously tampered with. Once the news came out, the absolute security of the POW consensus was fundamentally denied. The mining industry is facing the biggest consensus blow since its birth. Fortunately, most miners chose to stick to it, and the powerful computing power left no room for hackers to attack.

2 ) The hash rate war has put the ideal of decentralization under question

At the end of 2018, Wu Jihan, who is known as the mining overlord, and CSW, who is known as Satoshi Nakamoto, had a disagreement, which led to a war of forks between the two factions. In order to prove that they represent the most mainstream opinions, both opposing parties mobilized their computing power at all costs and started a battle for blocks.

A large amount of computing power is involved in the battle between the two. The public suspects that the computing power has actually been held hostage by a small number of people. The decentralized ideal that has always been the hallmark of the mining industry has been strongly impacted. This may be the biggest stain in the ten-year history of the mining industry.

3 ) POS consensus is accepted by the mainstream, and mining faces a major crisis of stagnation

In the past ten years of mining, the computing power of the entire network has increased exponentially, which has brought security, but there has also been a voice that continues to question that mining is too energy-consuming. With the emergence of the POS consensus mechanism, its advantages such as higher TPS and low energy consumption have gradually been accepted by the mainstream, and the mining industry is facing the crisis of being cut off from the bottom of the pot.

After ten years of development, the mining industry still faces challenges such as policies, market conditions, hackers, and miners’ disagreements. However, the vitality of the mining industry has become stronger amid these challenges. What does not destroy you will eventually make you stronger. After ten years of development, the mining industry has responded to all doubts and challenges with facts.

3. What has the mining industry gained and lost in its ten-year evolution?

The opportunities in the mining industry far outweigh the challenges in the past decade. A consensus based on a few idealists has evolved into an industrial cluster that unites tens of millions of people, and the position of the mining industry has been greatly consolidated. However, as the industry grows, various interests are mixed in, and the mining industry has deviated from its original intention to some extent. Compared with what it has gained and what it has lost, which is more important?

1) The dragon slayer is turning into a dragon, and the followers of decentralization are dominating the world

The current annual output value of the entire POW consensus mining industry is approaching the 100 billion US dollar mark, and the upstream oligopoly effect of the industry is obvious. As the upstream mining machine manufacturer, Bitmain has taken advantage of its inherent advantages to control nearly half of the total network computing power, and has become a veritable mining tyrant.

While profiteering has stabilized the mining industry, it has also given rise to industry oligarchs, and the existence of oligarchs has seriously undermined the original intention of mining decentralization. The young man who once challenged the centralized reality mechanism with a mining machine has now transformed himself into a center in a certain sense.

2 ) The former monopoly maker has transformed into a defender of morality

The world's first mining farm, "Baomao Mine", occupied 42% of the computing power of the entire network as soon as it was launched. Therefore, mining farms have always been regarded as the initiators of mining centralization. Under the trend of industrialization, mining farms have found a more suitable way of existence.

Mining machine hosting is currently the main business of mining farms. With the existence of mining farms, small and medium-sized miners have found their own living space. Although a large number of mining machines are centrally hosted in mining farms, the computing power is dispersed among miners all over the world.

The emergence of cloud computing power has given the decentralized computing power a further hope. By splitting the computing power of mining machines, the threshold for mining has been lowered, and most novices can also enter the mining industry. Distributed computing power is more in line with the original intention of decentralization.

At present, the field of cloud computing power has begun to take shape, and platforms such as RHY Mine, BitDeer, and NiuBit have built the fulcrum of the cloud computing power industry.

3 ) The core concept is recognized, but the company itself is still on the margins

Satoshi Nakamoto's decentralization and borderless concept has gradually entered the mainstream vision as the mining industry matures. Its advantages are also recognized by the world. The giant Facebook wants to use the blockchain to issue the borderless currency Libra. As soon as the news came out, all parties responded enthusiastically, and there were many optimistic people.

However, the mining industry still does not receive recognition from the mainstream world today and can only exist as a marginalized sector.

In the past ten years, a mutually restrictive relationship based on common interests has been formed between mining machine manufacturers, miners, and the secondary market. All parties in this restriction have more or less been forced to move forward under the trend.

How many people entered this industry with pure original intentions, but now compromised under the constraints of various interests. How many people were pure profit-seekers, but became firm defenders under the consideration of their own interests? This may be the charm of the mining industry.

After ten years in the mining industry, things have changed and people have changed, but fortunately the ideals remain.