Exclusive interview with Yang Xin, head of Bitmain’s product department: The technical threshold for mining machines is much higher than the capital threshold

On the afternoon of March 29, Bitmain announced that the new Antminer S17 series equipped with the second-generation 7nm chip will be officially released on April 9 and will be available immediately upon release.

Compared with the previous situation where it took two months to deliver the mining machines after they were released, Bitmain has put a lot of effort into meeting the demand for flood mining this time.

Just 5 hours after Bitmain officially announced the news, Canaan Creative also announced that Avalon's new generation of Bitcoin mining machines, the A10 series, will soon be unveiled.

As in other chip fields, the competition for mining machines is also a race against time. If there is a slight mistake, the market may be occupied by the opponent's excellent new products.

Looking back at the more than ten mining machine manufacturers that have emerged around the world, only a handful are still standing. "All failures in competition are due to inferior technology," said Yang Xin, product manager of Bitmain, who knows this well.

In the face of the oil field of mining machine production, new players are constantly entering the market and eager to try. However, Yang Xin believes that there is a shortage of talents in the field of computing chips in the world, and even fewer talents in developing special chips for digital currencies.

"Talent is the most expensive, and the technical threshold of this industry is much higher than the capital threshold." Yang Xin said. In addition to having a complete and mature product chain, Bitmain also has a systematic high-end R&D talent. This may be the moat for it to ascend to the Iron Throne.

On the occasion of the release of the new S17 product, Odaily Planet Daily conducted an exclusive interview with Yang Xin. In the interview, he showed us the current advanced 7nm chip development process and potential value, as well as Bitmain's technical concept with his professionalism. Of course, he also answered various questions about S17.

The following is the interview transcript, enjoy:

S17 makes money faster

Odaily Planet Daily: How long have you been at Bitmain and what is your main responsibility now?

Yang Xin: Almost three years. I was initially responsible for embedded software at Bitmain. Later, I gradually participated in the development of mining machine software and the entire product, and eventually was responsible for all product delivery. From the earliest chip definition to chip design, verification, manufacturing, certification, and even customer support, I was responsible for the entire process. (Note: Embedded software is the operating system and software embedded in the hardware)

Odaily Planet Daily: What are the characteristics and advantages of S17?

Yang Xin: First, the energy efficiency ratio is low. For Bitcoin, electricity costs account for a very high proportion. So a significant reduction in the energy efficiency ratio means a significant reduction in costs, and a reduction in costs means profits.

Second, the performance is strong. Whether in terms of energy efficiency or computing power per unit volume, the new machine has been greatly improved, which is very important for people who invest a lot of money in mining farms. The computing power per unit volume means that some mining machines can have a very high computing power, but the volume is as large as a refrigerator, which is purely two machines stacked into one. So its computing power is not as good as S17 under the same volume.

Odaily Planet Daily: Is it optimized based on the S15 series and iterated on the basis of S15?

Yang Xin: As the second generation of 7nm chips, it is obviously a brand new iteration. There is still a generation gap (which can be understood as a qualitative leap), not a simple optimization.

Odaily Planet Daily: How long is the R&D cycle of the S17 series?

Yang Xin: It’s hard to say. Because a lot of our R&D is rolling, because the technology is a combination of more than a dozen technologies, some of which we need to invest in very early, some of which require more time to develop later, and some problems even need us to solve within ten days.

Odaily Planet Daily: The most mainstream product on the market now is the cost-effective S9. Will not many people buy the S17 after it comes out?

Yang Xin: No. In 2016 or last year, it was definitely the most cost-effective to buy the S9; now it is definitely more cost-effective to buy the new one. It is indeed more efficient in making money.

Only TSMC can make 7nm

Odaily Planet Daily: Are mining chips more powerful as their process becomes higher?

(Note: Process refers to the precision of integrated circuits, currently measured in "nm". The higher the precision, the lower the "nm" value, and the more advanced the production process)

Yang Xin: Simply put, the more advanced the process is, the greater the performance advantage it will bring, but it will also be more expensive.

Odaily Planet Daily: Is the high price due to the extremely high R&D costs, or is it due to limited production capacity?

Yang Xin: There are several reasons: First, the technical difficulty. The development of the process is actually getting slower and slower because it has physical limits. At 7nm, the quantum effect is already very obvious.

Second, the difficulty in breaking through the entire industry chain has led to insufficient production capacity. When the 130nm chip was still considered an advanced process, there were still more than a dozen factories in the world that could produce it. But when it quickly evolved to 55nm and 40nm, the number of players involved decreased sharply. Why? Because the development costs of each generation are rising sharply. If manufacturers cannot make a profit from it, they will give up this technology competition.

At the current 7nm generation, there is basically only one company in the world, TSMC, that can achieve this process . The old Intel and IBM do not have mature processes in this regard. This is a huge reversal. Before this, companies like Intel and IBM were still very powerful.

Odaily Planet Daily: Are there any products that use 7nm chips widely in daily life?

Yang Xin: Actually, it is not widely used. You may only see it in the most advanced Apple phones or other high-end phones, and the core chips inside may use it. NIVIDIA graphics cards or AMD CPUs may also use it. Because TSMC is the only company with 7nm production capacity, it is in short supply and has not yet reached the point where it can be seen everywhere and is "cabbage".

Odaily Planet Daily: Are the problems mentioned above the ones that hinder the large-scale use of this chip?

Yang Xin: Yes, the current problem with 7nm is mainly limited by TSMC’s production capacity. Everyone wants to use it, but TSMC’s production lines are already full, and there is no other company that can make it. There is only one company, no other branches, so even if you want to use it, you can’t.

We and TSMC are investing in 5nm technology

Odaily Planet Daily: A hardware product has different stages, from early experiments, maturity, to large-scale application. Your 7nm has developed to the second generation. Which stage do you think it is in?

Yang Xin: The quality of our products is suitable for large-scale promotion and sales. They are produced internally from trial production to small batches and then to large batches before they are made available to everyone. We do not offer experimental products to everyone. This is impossible.

Odaily Planet Daily: Is there still motivation to develop the next generation of 7nm chips?

Yang Xin: From a technical perspective, there is no end. Its next generation is called 5nm technology. Like TSMC, we have been following up and doing research and development very early. However, the investment from the beginning of research and development to the time when a technology can be put into use is in years. Depending on the situation, each generation is different. Some key components need to be laid out ten years in advance. Now 5nm and the next generation of updated technology have actually been studied by TSMC or upstream and downstream manufacturers, and are being carried out at the same time as 7nm technology. But when it can be used for mass production will be slower and slower. Therefore, in the near future, 7nm should still be the best choice.

There are only a few real leaders in computing chips

Odaily Planet Daily: Which major field does Bitmain’s mining chip belong to?

Yang Xin: IT technology has three basic industries: storage, communication and computing. Bitmain’s chips belong to the field of high-performance computing.

Odaily Planet Daily: Where are computing chips mainly used? What are the well-known manufacturers in this field? How many mining chip manufacturers are there?

Yang Xin: There are only a few real leaders in computing, Intel, AMD and NVIDIA. Many Chinese supercomputers use their chips. Bitmain's supercomputers should be narrowed down a little bit. They are special supercomputers for digital currencies. For example, there were more than a dozen mining chip manufacturers in the world.

Odaily Planet Daily: Can you briefly introduce the chip development process?

Yang Xin: The chip development process, in simple terms, goes through several stages: logic design, module design, and layout design. After that, it is handed over to TSMC for production. Logic design is to design the algorithm based on the goal you want to achieve. When it is implemented in the module, that is, the physical design, it has already begun to be transformed into a gate-level circuit, which can be implemented in the spatial structure. (Note: gate-level, "gate" means logic gate, which is the lowest level of the smallest unit in logic design. Circuits at this level need to be combined with physical design.)

But it also needs to be combined with the specific process of the foundry. The same design, produced in different wafer fabs, will result in different final products. After combining the process, the resulting layout is called a mask, which can be used for production, also known as tape-out.

Odaily Planet Daily: What happens after the chip is produced?

Yang Xin: After the chips are produced and processed by TSMC, they are sent to the packaging and testing factory for packaging and testing. After that, they are sent to the foundry for chip mounting (that is, electronic components such as resistors, diodes, and chips are attached to the circuit board), and then assembled into mining machines in our factory in Shenzhen.

“The technical threshold is often much higher than the financial threshold”

Odaily Planet Daily: You said that there are about 20 or so manufacturers of mining machines in the world. What are the main problems with those mining machine manufacturers that disappear while they are still in business?

Yang Xin: The mining machine industry, or the blockchain industry, has been a global circle industry since the beginning. To put it bluntly, all competition (failure) is due to inferior skills. This inferior skills refers to your chip design, your mining machine design, your supply rhythm, and even whether you can smoothly deliver the mining machine to the customer and help them set it up. These are all your "skills". You must be the best in all aspects to gain a foothold in this market. Because the winner takes all, when any industry develops to a certain stage, there will only be one head player with two or three companies that can survive, and then the rest will be abandoned by the market.

Odaily Planet Daily: I have noticed that the memory industry has only been developing for more than 20 years and the number of companies has dropped from 40 to 50 to 5. Mining chips have only been around for a few years. Do you feel that we have reached this stage?

Yang Xin: Almost there.

Odaily Planet Daily: Even though there are not many manufacturers now, we can still see some new mining machine manufacturers joining. Although their products have not been released, there will be rumors.

Yang Xin: Yes, there will always be some people who want to test and try again and again. After all, they will only give up after trying.

Odaily Planet Daily: How high is the threshold for this industry?

Yang Xin: The threshold is one aspect, the process. Behind the integrated circuit design technology, there is also a complete production, sales, delivery, etc. The entire product chain is a threshold. The second aspect is talent. Even now that China is vigorously supporting the integrated circuit industry, it is difficult to recruit such talents. Bitcoin chips are chips in the computing field. This field has long been dominated by Intel, AMD, and NVIDIA. China is relatively short of talents in this field, and it is also short of talents in the world. Being able to gather these high-end talents together will naturally create a huge threshold.

Odaily Planet Daily: What are your advantages in technical talents? Are there any quantitative indicators to illustrate this?

Yang Xin: We have all the R&D personnel, and the entire system of R&D talent is the most complete and high-end one at present. You can refer to our prospectus for details.

Odaily Planet Daily: Do you pay attention to some new players in the market? For example, I have heard of Yotta and Linzhi recently. Have you heard of these brands?

Yang Xin: We will pay attention to various things technically, but let’s talk about the actual objects. Generally speaking, PPT mining machines will be filtered out by us in the early stage.

Odaily Planet Daily: I often hear people use the cost of wafer production as the threshold for developing mining machines. Is this standard reasonable?

Yang Xin: This is a small threshold. From the perspective of tape-out, it is a one-time fee. This fee is indeed very high, but it is not so high that those giants cannot afford it. For example, if ICBC wants to do this, it is easy to pay for tape-out. But it does not have the talent. Talent should be the most expensive, and the technical threshold is often much higher than the financial threshold.

The happiest thing is to hear "the product is sold out"

Odaily Planet Daily: What is your usual working state like? What are your happiest and most difficult times?

Yang Xin: The working condition is still very hard (laughs).

The happiest moment for me is when I see the machines selling well. When the marketing staff urges me to "produce more quickly, they are sold out", I am very happy. It is great to have something I made recognized.

Odaily Planet Daily: That should be around the end of 2017 to the first half of 2018?

Yang Xin: Often. We can still have fun often.

The most difficult times are when we encounter unexpected problems in mining machines, or when problems take a long time to solve, or when problems are complex and difficult to locate. This is also very common in R&D. Although everyone will encourage each other at this time, they are still quite heavy-hearted. It is especially annoying when problems cannot be solved even if you stay up all night.

Odaily Planet Daily: Will there be a period of time when we need to concentrate on overcoming difficulties and produce a product?

Yang Xin: Yes, this situation is very common here. In order to make this product as good as possible, many things are solved one by one. In terms of performance, we strive for 1%, 1%, and accumulate to achieve the value you want. A lot of our R&D colleagues have put a lot of effort into it.

Odaily Planet Daily: How do you deal with difficult problems, especially technological breakthroughs?

Yang Xin: They (department employees) will definitely have some, and they will all come to me in the end, and then we will work together to find solutions. I also know that it is difficult for people in the world to understand these things better than us. Originally, the engineers here are gathered from very excellent companies. Their own quality is already top-notch, and coupled with their familiarity with the industry and products, it is difficult for outsiders to understand this industry better than us.

Odaily Planet Daily: Okay, thank you Mr. Yang Xin for sharing today.