Bitmain’s confidential data leaked: 600,000 new mining machines produced in half a year, valuation will reach 12 billion US dollars

The media said that TSMC attached great importance to this, and even some TSMC executives went to Japan to purchase key equipment for the order.

However, the exact number of orders has not been released.

Recently, a supply chain person close to TSMC revealed to a blockchain book that this batch of orders is for 7nm and 16nm wafers, with a total of about 50,000 pieces, which will be shipped in the second half of this year.

It is reported that in order to get the goods as soon as possible, Bitmain would rather "pay first and then receive the goods" and pay in cash.

This number means how many new mining machines Bitmain will produce?

Based on the number of wafers cut, if the order of 50,000 wafers is delivered smoothly, Bitmain is expected to ship about 600,000 mining machines in the second half of this year.

Several miners revealed that the futures price of Bitmain's 7nm mining machine on the market is 20,600 yuan per unit, while the spot price is 30,000 yuan.

Chen Lei, a Huaqiangbei mining machine dealer, said that if the price of Bitcoin remains above $10,000 for a long time, the official website futures price of the S17 series mining machines is expected to reach 25,000 yuan.

If the price of Bitcoin continues to rise, the price of mining machines will also rise further.

To this day, Bitcoin mining machines are still the main source of revenue for most mining machine manufacturers. The prospectus submitted by Bitmain in 2018 shows that in the first six months of 2018, 94.3% of the company's revenue came from mining machine sales.

Based on this calculation, Bitmain's revenue in the next six months is expected to reach about 12-15 billion yuan. Bitmain's previously exposed prospectus shows that the company's net profit margin has been fluctuating around 30%.

There are rumors that Bitmain is secretly planning to go public in the U.S. If calculated based on the above indicators, Bitmain's full-year net profit is expected to reach about $1.2 billion.

The prospectus previously disclosed by Bitmain shows that the B+ round of financing completed in mid-2018 was valued at US$14.2 billion. From July 2017 to June 2018, Bitmain's net profit was US$1.36 billion. Based on this calculation, Bitmain's PE value is about 10 times.

Among technology companies, a PE value of 10 is still a relatively conservative number. According to an investor familiar with Bitmain, if Bitmain successfully goes public in the United States, its market value is expected to reach $12 billion.

Among Chinese technology companies, this market value is comparable to that of iQiyi, or equivalent to two Bilibilis.

The gradual commissioning of these mining machines will once again push the computing power of the entire Bitcoin network to a new peak.

On August 18, the difficulty of Bitcoin mining increased again by 1.98% to 10.18T, entering the "10T new era". The total network computing power also reached an unprecedented 72.79EH/s.

"In the future, the difficulty of Bitcoin mining will definitely soar further," said miner Chen Hanping. In the mining circle, this has become a consensus among all miners.

If calculated based on a computing power of 50TH/s per unit, Bitmain's 600,000 mining machines alone can provide 30E of computing power.

If calculated based on the 70% market share in Bitmain's prospectus, the total Bitcoin network hashrate will continue to grow by 42.8EH/s to 111.6EH/s in half a year. The network difficulty will also increase to 16.16EH/s, a 58.8% increase from the current level. This means that the daily output of the same mining machine in six months will only be 62% of what it is now.

However, considering that Bitmain’s 600,000 mining machines also include a certain proportion of 16nm mining machines, it is estimated that the computing power of the entire Bitcoin network will increase by about 50%.

Obviously, the miners are mentally prepared.

"Mining machines on the market have long been in short supply. The most popular ones are still the high-computing machines such as Antminer S17 Pro and Shenma M20S." Chen Lei revealed, "Compared with the S9 series, the new mining machines have greater computing power, better value retention, and longer life cycle. Now, futures mining machines have been scheduled for delivery at the end of the year."

However, it is worth noting that in the eight months from the end of last year to now, the total computing power of the Bitcoin network has only increased by 36EH/s. Among them, much of the increase in computing power comes from the restart of old mining machines, rather than the influx of new mining machines.

"Even in the previous bear market, the supply of 7nm mining machines was still tight." In Chen Lei's view, the reason why 7nm mining machines were scarce before was because mining machine manufacturers encountered a production capacity crisis.

"In the first half of this year, orders from digital currency chip companies generally shrank, probably due to the price of the currency," said a TSMC supply chain source. "In addition, TSMC's own 7nm production line is also facing huge challenges."

Public data shows that in the mobile phone industry, the three flagship chips - Apple A12, Huawei Kirin 980 and Qualcomm Snapdragon 855 - all use TSMC's 7nm process. The production capacity left by TSMC for mining machine companies is not much.

Chip production capacity has become a major problem that plagues the development of the entire mining machine industry.

In the mining circle, Bitmain and Canaan Creative have always chosen TSMC as their supplier. In the 7nm era, TSMC is one step ahead, and these two mining machine manufacturers have also taken the lead in achieving mass production of 7nm mining machines.

In addition, Samsung has also entered the digital currency mining market in the past two years. Both Shenma and Xindong, two rising stars in the mining machine circle, have chosen Samsung as the supplier of their new products.

Taking Shenma's M20 series mining machine as an example, it uses Samsung's 8nm chip and controls the power consumption ratio at a relatively low level - 48W/T.

However, Samsung is facing an unprecedented crisis in terms of production capacity.

In July this year, the Japan-South Korea trade war broke out, and Japan announced a ban on raw materials for South Korea's semiconductor industry. Photoresist, an important raw material in the production of semiconductor chips, was on the ban list.

It is reported that the Korean semiconductor industry's photoresist reserves are less than two weeks.

Uncertain factors such as the Japan-South Korea trade war may become a major variable that restricts the capacity expansion of mining machine companies such as Shenma. It is also unrealistic to temporarily switch suppliers.

"Take the Shenma M20 series mining machine as an example. It uses the 8nm process, but TSMC does not have an 8nm production line." Zhang Wen, a chip practitioner, pointed out, "If Shenma switches to TSMC, it can only overturn the chip design and redo it. The two sides will continue to run in."

According to people close to TSMC's supply chain, Shenma has recently expressed its willingness to switch to TSMC, but was rejected.

Looking at it now, betting on TSMC may be Bitmain's luckiest choice.

A year ago, the digital currency industry was in a slump. Since then, the IPO plans of Chinese mining machine companies Canaan Creative and Bitmain in Hong Kong have also been shelved.

Entering 2019, the cryptocurrency market has recovered and the mining industry has risen again. However, today's mining machine market has also presented a new market pattern.

Bitmain still occupies most of the market share, while two up-and-coming companies, Shenma and Xindong, are gradually rising.

Earlier, in an interview with chip industry media Xinzhixun, Yang Zuoxing, founder of Shenma Mining Machine, said that Shenma sold 500 million yuan worth of mining machines in 2017, with a net profit of 70 million yuan.

Two years later, Yuhong, the founder of the Three O'clock Community, revealed in her circle of friends: "Dr. Yang received 700 million in cash a week, and miners lined up to give him money."

"The rise of Shenma and Xindong was initially due to the booming mining industry, and the Antminer S9 was in short supply," miner Wu Di told Yiben Blockchain. "After that, a large amount of Antminer S9 inventory was accumulated, which prevented Bitmain from fully producing new mining machines."

The prospectus previously released by Bitmain shows that as of the end of June 2018, the company's inventory of mining machines for sale was worth US$560 million, equivalent to 20% of sales in the first half of 2018. However, Shenma and Xindong, which started later, do not have these troubles.

"When the price of Bitcoin approached $3,000, Ant S9, as the previous generation of mining machines, was on the verge of shutdown price. However, the daily income of Shemma's M10S and Xindong's T3 were both around 40 yuan, grabbing a lot of market share from Bitmain," said Wu Di.

Since then, the mining machine market has once again ushered in new changes.

"From my personal sales data, Bitmain still occupies most of the market in the entire mining machine industry." Chen Lei pointed out, "After it, Shenma, Xindong, Avalon, and Yibit together account for about 40% of the market. Among them, Shenma's proportion is second only to Ant, while Avalon, which was originally ranked second, has begun to fall behind."

In the second-hand mining machine circle, Antminer is still the first choice for miners.

In addition to the huge mining machine reserves, another advantage of Antminer is that it is easy to repair. "Innosilicon's machines can only be returned to the factory for repair. Shenma has cooperated with some mining companies and has multiple repair points across the country." Chen Hanping said, "Antminer's machines can be repaired by any third-party repair company. The sooner they are repaired, the more money miners can earn."

Today, with the cryptocurrency market once again booming, competition in the mining machine circle is becoming increasingly fierce.

Compared with Bitmain and Shenma, which have been widely reported in the media, Wuhan-based Innosilicon seems quite mysterious. Zhang Wen revealed that Innosilicon is a long-established chip company with a history of more than ten years. Before entering the mining machine industry, it was already well-known in the interface IP and ASIC customization industries.

"Bitmain's Zhan Ketuan, Shenma's Yang Zuoxing, and Xindong's Ao Hai are all veterans who have been working in the chip industry for nearly 20 years." Zhang Wen said, "Now, the considerable income brought by the mining machine industry has made them choose to enter the industry one after another."

Obviously, these chip veterans will not stop here.

Today, Bitmain's AI chip has developed to the third generation. Its latest BM1684 chip has achieved a three-fold performance improvement over the previous generation, and its solutions have also been recognized by government departments in Fuzhou, Beijing Haidian and other places.

In an interview with the outside world, Yang Zuoxing also stated that he will move into the fields of AI chips, GPUs, etc. in the future.

"From a historical perspective, China's chip industry started late and has long lagged behind the United States. But in the mining machine chip industry, China not only has the world's largest mining machine market, but also has top wafer fabs like TSMC. It is not surprising that Chinese mining machine companies are leading the world," said Zhang Wen.

In his opinion, the huge cash flow brought by mining chips has brought new opportunities to the Chinese chip industry, which previously lacked the ability to generate revenue. And driven by these funds, the Chinese chip industry may be able to go further.