The truth: Bitmain is “lightly equipped” and may focus more on chip development

The author is Xu Zihao, a semiconductor industry analyst

There have been rumors about Bitmain’s personnel adjustments recently. What is the truth?

According to people familiar with Bitmain, the various rumors outside are too outrageous, and the truth is actually very simple: one word: "focus".

Because Bitmain has been expanding rapidly since 2018 and has launched many new projects, which coincided with the bear market when the price of coins plummeted. Although the company still has strong cash flow, it needs to focus more for long-term development considerations.

Where should they focus? Should they abandon AI and focus on the upstream and downstream development of blockchain? Or should they abandon mining machines and focus on the AI ​​industry? Neither is correct. It is reported that Bitmain will focus on chip development in the future.

Mining machine chips maintain their leading position

Mining machines are the infrastructure of the POW (proof of work) virtual currency field and the foundation of Bitmain. This personnel adjustment will focus on the research and development of mining machine chips and maintain industry-leading competitiveness, which will be one of the core goals of Bitmain's personnel adjustment.

In fact, in the previous bear markets, Bitmain relied on continuous chip iteration to improve the performance of mining machines. At the same time, domestic and foreign competitors continued to withdraw. Finally, in 2017, Bitmain came to the leading position in the industry, with a market share of 74.5%.

Bitmain's s9 series has also been firmly in the industry's top spot with its comprehensive strength. In the fourth quarter of 2018, Bitmain launched the Antminer S15 equipped with a 7nm chip, with a computing power of up to 28TH/S and an energy efficiency ratio of 57J/T. Compared with the previous generation of products, the performance has been significantly improved. This is Bitmain's most powerful mining machine in terms of energy saving advantages so far, and it is also a 7nm mining machine with high reliability in the industry.

(Pictured is Bitmain's 7nm chip)

As chip manufacturing processes improve, the cost of tape-outs also increases significantly. Bitcoin analyst Arjun Balaji pointed out that some of Bitmain's early competitors have closed down due to the difficulty and high cost of manufacturing 7nm ASIC chips. In a bear market, companies with better cash flow will undoubtedly find it easier to take the lead in the market. It is revealed that Bitmain will also gradually adopt TSMC's next-generation 7nm chips and higher-process products.

AI chips focus on security field

Bitmain began researching and developing AI chips in 2015, and has achieved remarkable results so far, having produced the first and second generation cloud AI chips and the first generation terminal AI chips.

(Pictured is Bitmain's second-generation cloud AI chip)

However, as a hot field, AI chips have attracted almost all the heavyweight players in the world. In addition to traditional giants such as Nvidia and Intel, some emerging giants such as Google, Amazon, Huawei, and Alibaba have also participated in the field through self-development or investment. On the one hand, this shows that everyone is optimistic about the huge demand for AI chips in the future, but at the same time, for emerging companies like Bitmain, how to focus is more important.

At the launch of Bitmain's first-generation terminal AI chip, it was clearly stated that it would focus on the pan-security field. In fact, security is currently the best scenario for AI to be applied. Yan Xiaqing, executive vice president of Uniview Technologies, said: "No industry has the most complete foundation and the strongest demand for artificial intelligence like the security industry." Megvii Technology, one of the four AI unicorns, also claims to be "a security company leading the development of the intelligent security industry." The extremely popular China Security Expo in recent years has also fully demonstrated the prospects of the industry.

However, there are still far from enough AI chips and related AI hardware products customized for the security industry. Traditional integrators such as HaiDaYu and the four professional algorithm manufacturers have not really entered the chip field for various reasons. They all urgently need better and more cost-effective AI chips.

Bitmain has also targeted this field and has launched a number of chip-based high-density servers, cut-in mini machines, 3D face terminals, AI modules and other products, and is constantly expanding its partners at home and abroad.

Focusing on the needs of security application scenarios to create AI chips should be a reasonable choice for Bitmain after "lightening its load".

Summary: Can Bitmain go further after focusing?

As a strong cyclical industry, the blockchain industry is closely related to the fluctuations of currency prices. It is normal to shrink quickly and practice internal skills in a bear market, and to maintain technical advantages and advance rapidly when the currency price recovers.

In my opinion, as part of the bear market contraction, the outside world does not need to be too surprised by Bitmain’s personnel adjustments (because the rise and fall of currency prices have their own rules, and historically there will be a day of skyrocketing sooner or later).

Whether Bitmain can go further in the future depends on the technological evolution in the bear market, such as the iteration speed and technical indicators of mining machine chips, the implementation and ecological improvement of AI chips, etc. This is the real strength of Bitmain as a "chip design company" after the focus.

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