Bitmain turns to AI, "Mining Tyrant" Wu Jihan: As a Chinese company, we must be prepared

Source: Bloomberg

Bitmain is the undisputed world leader in cryptocurrency mining hardware manufacturing, and now it wants to become a leader in artificial intelligence as well. Bitmain CEO Jihan Wu said that within the next five years, 40% of the company's revenue could come from the AI ​​sector.

Bitmain is the undisputed world leader in making cryptocurrency mining hardware. Now it wants to play a similar role in artificial intelligence.

In a rare interview with Bloomberg Businessweek, Bitmain CEO Jihan Wu said the company is applying its expertise in developing application-specific integrated circuit (ASIC) chips to develop a new AI division.

Wu Jihan explained that the ASIC chips that the company uses to produce powerful and efficient cryptocurrency mining machines are also an important component of a specific type of deep learning.

Bitmain has a long history of interest in AI. The company has released several products through its AI chip brand Sophon and announced plans to launch two generations of chips in the coming months. Wu Jihan said that within the next five years, 40% of the company's revenue could come from its AI division.

While Bitmain is the undisputed market leader in cryptocurrency mining, the company is currently catching up in the field of artificial intelligence.

Be prepared for danger in times of peace: As a Chinese company, we must be prepared

Even by Bitcoin standards, the situation in China is wild, as the cryptocurrency boom became the largest speculative bubble ever, with as much as 80% of all cryptocurrencies mined worldwide being mined by chips sold by Bitmain.

“We feel very lucky,” said Jihan Wu, CEO of Bitmain. Two years ago, the company was virtually unknown, but by 2017, Bitmain had annual revenue of $ 250 million . To be serious about the number-crunching and power-hungry “mining” technology that underpins cryptocurrency networks, you have to have a Bitmain chip. But because this is China, radical change could happen at any moment.

Last year, the government cracked down on cryptocurrency trading and banned ICOs (initial coin offerings). This year, the government has signaled that mining activities may be strictly restricted. So even though Bitmain's success has far exceeded expectations, Wu Jihan is already planning the company's next move: artificial intelligence . "As a Chinese company, we have to be prepared," said the CEO, who is only 32 years old and a little taciturn.

40% of revenue will come from AI chips

In a series of interviews conducted by Bloomberg Businessweek at Bitmain’s headquarters, Wu and other executives said AI chips are naturally connected to their privately held and extremely secretive company. “AI requires a lot of computing, just like bitcoin mining, and the best way to do it is through custom chips, called application-specific integrated circuits (ASICs) ,” Wu said.

With the advantage of custom chips, Bitmain has quietly become a global force. A February report from Bernstein Research estimated that Bitmain's annual profits exceeded $3 billion, comparable to its much larger rival Nvidia. The report also suggested that Bitmain may be one of the top five customers of Taiwan's chip giant TSMC, which provides the most advanced chip manufacturing process and whose customers also include Apple and Qualcomm. Wu Jihan declined to comment on Bitmain's profits, but given the company's revenue figures, the profits do not seem as good as Bernstein estimated. TSMC declined to comment.

Last October, Bitmain began selling its first AI chip, the " Sophon BM1680 ." This is an ASIC chip designed to accelerate machine learning as part of a $600 accelerator card. Although its performance is not as comprehensive as high-end graphics cards from Nvidia and AMD, the chip is more powerful at certain deep learning tasks and is cheaper. "We just want to do something that they can't solve well," said Wu Jihan. According to Wu Jihan's estimate, 40% of Bitmain's revenue will come from AI chips in the next five years .

Sophon SC1 accelerator card. Photo: Jasper James, Bloomberg Businessweek

Bitmain’s AI chip, Sophon, named after the micro-supercomputer in the popular Chinese science fiction novel “The Three-Body Problem,” was released five months after Google’s TPU (tensor processing unit). But despite Google’s dominance in AI, its chips are only available to customers of Google’s cloud service, which is not available in China. This puts Bitmain in an extremely advantageous position in China.

A generation of mining tyrants

If Bitmain’s recent history is any guide, it’s safe to say that the company won’t be a weakling in the field of artificial intelligence for long. In 2011, Wu Jihan, a video game geek who prefers to wear white T-shirts, light jeans and sneakers, came to Beijing to work as an investment analyst and stumbled into the world of cryptocurrency. He quickly became obsessed, voraciously learning everything he could about cryptography and the history of currency. He translated the famous Bitcoin white paper, originally published anonymously by Satoshi Nakamoto in English, into Chinese, and it quickly became a model for online cryptocurrency forums.

In 2013, Wu had dinner at a Beijing restaurant with entrepreneur Zhan Ketuan, a chip designer who had invested in a start-up a few years earlier to run a TV set-top box business. They spent two hours discussing the ins and outs of Bitcoin, and Wu suggested starting a chip company. Zhan Ketuan, who had been struggling with entrepreneurship at the time, listened intently. The next morning, Zhan Ketuan spent two hours learning more about cryptocurrency on Wikipedia. Then he called Wu to say he had made up his mind.

Later that year, they sold their first chip.

Wu Jihan said that there were two seemingly reasonable Bitcoin businesses at the time, and selling mining chips was one of them. The other was cryptocurrency trading, a model that came with more legal risks. "The only thing you can do is Bitcoin mining ," he said, "because it is 100% legal."

In the early days, Bitcoin and other cryptocurrencies were the interests of math geeks, who could mine Bitcoin using software running on their laptops. But as mining profits increased, miners were forced to upgrade their mining equipment if they wanted to solve problems faster than other miners to earn cryptocurrencies. When traditional CPUs were replaced by high-end graphics cards, or GPUs, a crazy technological arms race began .

In late 2013, the price of bitcoin first surpassed $1,000, and last year it briefly reached $19,000 before falling back to the $8,000 range. Miners began experimenting with ASICs, including products from Bitmain. These chips have the necessary algorithms encoded directly on the silicon and are faster and use less power than GPUs.

Bitmain's Antminer costs between a few hundred and a few thousand dollars. Unlike traditional PCs, which are made up of various components, the miner is filled with dozens or hundreds of the same high-performance chips. Customers who buy the miners are usually large mining operators in areas with low electricity prices.

Betting on AI, Bitmain will complete a brilliant turnaround

Bitmain’s success has come under fire from purists who see Bitcoin as a way to subvert any form of centralized power. Voting rights are based on the percentage of transactions controlled by an individual, so decisions about Bitcoin’s future are democratic. This meant that when Bitmain began to argue that Bitcoin should be tweaked to make it easier to buy and sell goods, it had a lot of influence in the debate. Eventually, Bitcoin was split into two currencies: the original Bitcoin (BTC) and the Bitmain-backed Bitcoin Cash (BCH) . Bitcoin Cash features greater centralization and lower transaction fees.

Regarding the controversy, Wu Jihan said: "This is a very old story. The world of cryptocurrency is becoming more diversified ." With this in mind, Bitmain is selling customized mining machines for more than a dozen cryptocurrencies, and plans to add more.

Of course, controversy has followed. In April, Bitmain released an $800 miner for ethereum, another cryptocurrency that’s considered resistant to ASICs and therefore harder for Bitmain to dominate. Even so, the news sparked a frenzy that sent shares of graphics chipmakers tumbling. It also sparked a debate among ethereum developers about whether the cryptocurrency should “fork” again, that is, branch off into a new version that would render Bitmain’s miners useless.

Later, Ethereum developers seemed to have come to terms with Bitcoin developers entering their market, and Wu declined to comment on criticism of Bitmain’s power because other chipmakers were bound to enter the market. “If it’s not us, it could be Intel, it could be Nvidia, it could be AMD,” he said.

As for now, Bitmain is on the offensive. It has built new mines in the United States, and its focus in China is on chip development. And AI, which Bitmain has targeted, is an industry that, unlike Bitcoin, has the full support of the government. Last July, the Chinese government issued a new generation of artificial intelligence development plan, planning to transform China into a leading player in the field of artificial intelligence by 2030 by investing in research and supporting related industries.

If that support materializes, Bitmain will have completed a dramatic turnaround—with its uncertain status and any concerns about a regulatory crackdown becoming a distant memory.