As we all know, the Bitcoin mining industry is going through a test after the fourth halving. Since Bitcoin’s block subsidy was slashed, hash prices (revenue per terrahash) have reached all-time lows. Meanwhile, the post-halving mempool frenzy has subsided, adding fuel to the fire of already nervous mining operators.
Zhang Nangeng is the founder and CEO of Canaan Intelligent Technology Co., Ltd. in Singapore. The company is the creator of the first Bitcoin mining application-specific integrated circuit (ASIC). Bitcoin Magazine The company gave its first interview to North American media to assess the state of the industry. Zhang commented on the origins of Bitcoin mining and offered his thoughts on the future of chip design and the trend towards environmental sustainability.
Zhang also pointed out emerging opportunities for Bitcoin in the Middle East, as well as the convergence between Bitcoin and the artificial intelligence (AI) industry.
Listen to the full audio interview with Canaan CEO Zhang Nangeng on the Bitcoin Magazine Podcast. Click here to listen.
The open source core of Bitcoin mining
Founded in 2013, Canaan revolutionized the mining industry with the launch of the first AvalonMiner ASIC machine, marking a turning point in computational efficiency that secures the Bitcoin network. As the industry gradually moves away from traditional GPU- and CPU-based hashing algorithms, the adoption and commercialization of professional ASIC hardware has allowed commercial-scale mining operations to begin to take shape.
Canaan’s shift didn’t happen out of nowhere, but after the company open-sourced its Avalon hardware and management software, it led to the widespread proliferation of ASIC-based hashing technology. Zhang noted that Bitcoin’s early embrace of the open source movement was “not a decision” but rather “a requirement for anyone who wanted to participate in the blockchain community” and a “dispersion of computing power throughout the blockchain community.” means.
“The best defense is [51% attacks]The goal is to rapidly distribute ASIC-based computing to users around the world.” Zhang estimates that the risk of 51% attacks has been greatly reduced due to the democratization and large-scale deployment of ASICs. The open-source nature of Canaan’s chip design has since prompted major companies, including China’s Bitmain and computing giant Intel, to create their own ASIC machines.
(Bitcoin) Defying Moore’s Law: Trends in Chip Efficiency
Canaan Technology, a designer of ASIC chips, has been a beneficiary of the semiconductor manufacturing boom over the past decade. At the heart of this progress lies Moore’s Law – the idea that computing efficiency doubles approximately every two years. Today, companies such as Taiwan Semiconductor Manufacturing Company (TSMC), Samsung (SSLF) and Semiconductor Manufacturing International Corporation (SMIC) are accelerating the pace of 3nm wafer production and seeking optimization.
However, the move toward smaller and smaller semiconductor architectures is not without challenges. Increasing transistor density on smaller and smaller wafers (i.e., sub-2 nanometer scale) induces quantum effects rather than classical effects. This state transition can lead to transistor failure and potential departures from Moore’s Law.
The question now is: Does Moore’s Law hold true, or will the boom in classical computing turn into a quantum bust?
Faced with these fundamental limitations of ASIC computing, Zhang admitted that “in the past, when we improved performance, the cost per terrahash would go down. Today, the curve has flattened. This indicates that technological progress is entering a new stage.”
“We do see a slowdown in process node advancements, driving us to new transistor technologies like GA (gate array) or nanosheet technology and backside power delivery. It’s not just about making the surface smaller, it’s changing the circuit structure [itself]”.
“Bitcoin computing resorted to pure digital logic, but today, we are moving closer to mixed-signal designs implemented in analog.” Zhang said the increase in complexity points to a gap between designers such as Canaan and the foundries that produce their own chips. “Design Technology Collaborative Optimization (DTCC)” is required.
Despite these challenges, Zhang believes AISC’s efficiency “will continue to rise in the next 3-5 years,” and the company plans to release at least one new product every year, with each generation of products “improving efficiency by more than 20%.”
This efficiency improvement was reflected at the Bitcoin Asia Conference held in Hong Kong on May 9, where Canaan launched a new generation of A15 AvalonMiner, with an efficiency of 18.5J/T, while the previous A14 model The efficiency is about 20J/T. Zhang noted that the A15 is specifically optimized for variable environmental conditions.
In particular, Canaan has enabled overclocking in the A15, and Zhang poked fun at the common question buyers often say: “Oh, you get extra performance for free?!” Unfortunately, according to That’s not the case, Zhang said, but the added features are expected to give A15 customers additional operational flexibility.
Decentralized Computing: A Middle East Outlook
Now more than ever, miners are looking for efficiency improvements to…*drumroll*…reduce costs and increase revenue. This is normal, of course, but miners are turning to new technologies and new geographies in search of cheap power.
Zhang pointed out that Canaan has made a strategic shift in response to this change in the market, and highlighted the company’s recent efforts to cooperate with mining companies in the Middle East region. “[The Middle East] Eager to invest in high-tech industries. These countries are particularly welcoming to Bitcoin and cryptocurrencies. The Middle East is poised to become an important digital hub.
Turning to regulatory issues in the Middle East, Zhang noted that the region has “made rapid progress in establishing complementary regulatory frameworks for mining.” As a result, companies like Zero Two, backed by Abu Dhabi’s sovereign wealth fund, are making significant progress in integrating Bitcoin mining and its waste heat for use in desalination.
Thermal Check: Sustainable Mining Trends
Since Canaan’s IPO on Nasdaq in 2019, the Bitcoin market has been booming, and Bitcoin mining companies have also been booming. As Bitcoin goes mainstream, publicly traded large miners like Marathon Digital Holdings Inc (NASDAQ: MARA ) and Riot Platforms (NASDAQ: RIOT ) become household names during the 2020-2022 bull run name.
But with increased visibility has come increased scrutiny from environmental groups, particularly the Ripple-funded and ill-conceived “Change the Code” campaign led by Greenpeace US.
When asked about environmental criticism of the mining industry, Zhang seemed unphased and welcomed discussions about the sustainability of the mining industry. “People’s perception that Bitcoin mining is not environmentally friendly is changing…Bitcoin mining can help develop the renewable energy industry.”
In particular, the Canaan CEO lauded heat recovery as perhaps the biggest yet-to-emerge trend in residential and commercial applications. “Mining heat recovery products have started this year. I think in a few years, I believe people will see a lot of impressive products that use mining heat. Today, we can produce water close to boiling point through mining operations.” He believes, This trend underlies the sustainable attributes of the mining industry and the overall trend towards hot monetization of the mining industry as a whole.
Zhang also emphasized that electricity from the hydropower industry, which is a key area where the mining industry can strengthen the deployment of renewable energy, often faces supply and demand mismatches.
Zhang said that instead of battery storage, “[bitcoin mining] These facilities can be operated at full capacity most of the time.This can shorten the payback period to approximately 5 to 10 years – meaning the same amount of capital can be developed more than twice Hydropower plants are built in the same time frame… The same principles apply to other renewable energy sources such as solar and wind, which are driven purely by economic factors.
He believes that mining will continue to move toward low-carbon energy, and is optimistic that market forces drive the pursuit of low-cost energy, showing that “mining can automatically balance environmental protection, economic benefits and development.”
Artificial Intelligence and Bitcoin Converge: Developing and Scaling Energy Assets
Typically, Bitcoin miners have been pioneers in electricity markets, flocking to places where power is plentiful and demand is low. The symbiotic relationship between underdeveloped energy resources and the inherently flexible and mobile network of Bitcoin miners drives ASIC-based computing to exploit resources at the edge of the grid. But, according to Zhang, that’s not the end of the story.
He sees a new relationship forming between AI data centers and Bitcoin miners, each looking for the lowest-cost energy input. Zhang noted that “major players” and “first movers” have begun to realize the potential integration between Bitcoin mining and artificial intelligence computing.
“In this context, Bitcoin mining can serve as the initial occupant of this field. [stranded] vitality, [generating] Economic benefits before AI computing power is fully launched. That’s what we’ve seen over the past six months.
Zhang also foresees that even after AI facilities are up and running, AI high-performance data centers and Bitcoin mining will be co-located: “Considering the redundancy requirements (25-30%) of large-scale AI computing centers ) power redundancy…Bitcoin mining can use redundant power supplies and shut down under the following conditions [AI comes online]”.
in conclusion
Zero-sum mining remains its own worst enemy, as it always has. Add to that the fourth halving, falling profit margins, and the next wave of ASIC efficiency gains, and it’s fair to say that making profits from mining is as easy as squeezing blood from a (digital) rock.
But on the other hand, there are positive trends emerging in the industry – Canaan’s CEO believes there are no opportunities for enterprising mining and ASIC companies willing to blaze a trail in energy and artificial intelligence. Not here.
