原文作者：Volcano X Capital
原文来源：Volcano X Capital
1. Introduction
With the skyrocketing price of cryptocurrencies such as BTC, blockchain mining has gradually entered the public eye, attracting the attention of a large number of investors and technology enthusiasts. Mining, as an important way to obtain digital currency, has become a hot topic of its core equipment, mining machines. However, despite the widespread discussion of the concept of mining rigs, many people still lack an in-depth understanding of how mining rigs work and whether they are profitable. This report aims to provide an in-depth analysis of the mining machine market, from the definition and classification of mining machines to the development history of mining machines, as well as the introduction and comparison of mainstream mining machines in the current market, so as to provide a reference for individuals or enterprises interested in entering the mining field.
2. Overview of mining rigs
2.1 What is a mining machine
In simple terms, a mining rig is specialized computer hardware that is used to earn cryptocurrency. They use computing power to verify transactions and create new blocks by running the corresponding mining software, and in the process they produce new cryptocurrencies as a reward. From a macro perspective, any device capable of running a mining program can be called a mining machine, including but not limited to professional mining machines, home computers, smartphones, etc. From a micro point of view, mining machines refer to those high-performance equipment designed for mining, such as ASIC mining machines, GPU mining machines, etc.
2.2 Classification and comparison of mining machines
- ASIC miner: Designed for specific algorithms, such as Bitcoin's SHA-256, Litecoin's Scrypt, Dash's X11, etc., it has very high efficiency and computing power, but lacks flexibility.
- GPU miners: suitable for a variety of algorithms and coins, such as Ethereum's Ethash, Zcash's Equihash, etc., providing good adaptability and versatility, but may not be as efficient as ASIC on a single algorithm.
- CPU mining: Although most mainstream coins have struggled to make significant gains through CPU mining, there are still some projects like Monero that emphasize the friendliness of CPU mining.
- Hard Disk Mining: Represents an energy-efficient and environmentally friendly way of mining, mainly used in projects such as Filecoin and Chia, to participate in network maintenance by providing storage space.
- LoRaWAN Gateway: The Helium network "mines" by deploying IoT devices, which is almost negligible in terms of resource consumption, but it relies more on network layout and coverage.
Classification and performance comparison of cryptocurrency mining machines
3. The history of the mining industry and its influence
3.1 Development History
CPU Mining (2009)
- Features: Mining using the central processing unit (CPU) of a regular personal computer.
- Limitations: low efficiency, high energy consumption.
GPU Mining (2010-2012)
- Features: The graphics processing unit (GPU) has significant advantages over the CPU in parallel processing, which greatly improves the mining efficiency.
- Data: For example, the early AMD Radeon HD 5870 could achieve a hash rate of about 400 MH/s.
FPGA Mining (2011-2012)
- Features: Field-programmable gate arrays (FPGAs) provide a better power consumption ratio, but require the user to configure and program it themselves.
- Shift: While there has been an increase in efficiency, the complexity of configuration requirements has limited its adoption.
ASIC挖矿（2013年至今）
- Features: Application-Specific Integrated Circuit (ASIC) miners are designed for mining, providing unprecedented efficiency and speed.
- Data: The computing power of early ASIC mining machines ranged from a few GH/s to TH/s, while the current leading ASIC mining machines such as Bitmain's Antminer S19 series can reach more than 95TH/s, and the energy efficiency ratio has been greatly improved.
3.2 Market Impact Analysis
In the development of cryptocurrency mining, several key events have had a significant impact on the mining machine market, and at the same time, the wave of mining machines has also affected the price fluctuations of digital currencies to varying degrees.
Critical event impact
- Launch of Bitcoin ASIC miners (2013):
- Impact: The advent of ASIC mining rigs has dramatically increased the total computing power of the Bitcoin network, making CPU and GPU mining uneconomical. During this period, the difficulty level of Bitcoin has risen rapidly.
- Data: At the beginning of 2013, the price of bitcoin rose from about $13 to more than $1,000 at the end of the year. While the price is affected by a variety of factors, the introduction of ASIC mining rigs is believed to have increased the number of market participants, contributing to the price increase.
- Ethereum network congestion and graphics card shortage (2017, 2021):
- Impact: Due to the explosive growth of DeFi and NFT projects, the Ethereum network has seen a surge in transaction volume, resulting in an increase in gas fees. At the same time, mining demand has led to a worldwide shortage of graphics cards, and prices have skyrocketed.
- Data: In 2021, the retail price of some high-end graphics cards was 2 to 3 times higher than the recommended retail price. The Ethereum price was around $730 at the beginning of 2021 and reached a high of over $4,000 by the middle of the year.
- China's crackdown on cryptocurrency mining (2021):
- Impact: The Chinese government's strict restrictions on cryptocurrency mining and trading have led to a major shift in the distribution of hash power around the world, with many mining farms relocating overseas, such as the United States and Kazakhstan.
- Data: This incident directly caused the hashrate of the entire Bitcoin network to drop by about 40% in a short period of time, and the price of Bitcoin also experienced a brief period of large fluctuations, from a high of about $64,000 in May to about $30,000 in July.
The impact of the wave of mining machines on the price of digital currency
- The increase in mining profitability is positively correlated with cryptocurrency prices: when the price of cryptocurrencies rises, more people invest in mining, which drives the demand for mining rigs, which further exacerbates the rush to buy hardware devices, especially graphics cards and dedicated ASIC miners. For example, during the great bull runs of Bitcoin and Ethereum in 2017 and 2021, the prices of mining rigs and graphics cards soared and even went out of stock.
- Changes in new technologies and algorithms may affect prices: whenever a new generation of more efficient mining rigs comes on the market, the competitiveness of old mining rigs decreases, some miners will exit the market, and the high performance of new mining rigs will attract more investors to participate in mining, and this change in supply and demand may have an indirect impact on the price of cryptocurrencies.
4. Distribution of mining pool hashrate
Mining pools are an important part of cryptocurrency mining, allowing miners to combine their computing resources to increase their chances of finding a block and distribute rewards in proportion to the hashrate contributed. Over time, the distribution of computing power in mining pools has been constantly changing, reflecting the trend of market competition and technological progress. Here's a look at the hashrate distribution of some of the major mining pools, as well as other notable mining pools:
The name of the mining pool
Distribution of hashrate of mainstream mining pools (taking Bitcoin as an example)
- F2Pool: Founded in 2013, it is one of the world's first Bitcoin mining pools. It is currently the largest single bitcoin mining pool.
- Poolin: Founded in 2017 by several key members of the former BTC.com, Poolin is highly competitive with F2Pool.
- AntPool: Operated by Bitmain, it is a veteran mining pool that serves miners worldwide.
Other mining pools to keep an eye on
- BTC.com: This pool has historically been one of the leaders in hash power, but its market share has declined in recent years.
- ViaBTC: Founded in 2016, it provides mining services for a variety of cryptocurrencies such as Bitcoin, Bitcoin Cash, and Litecoin.
- Slush Pool: Founded in 2010, it is the world's first Bitcoin mining pool. Although it is not as powerful as the aforementioned large mining pools, it is widely respected for its long history and contributions to the community.
Unscramble:
- Pool Concentration: Through the data table and pie chart, we can clearly see that the top mining pools (e.g. F2Pool, Poolin, AntPool) account for the majority of the market. This shows that the computing power in the Bitcoin mining field is highly concentrated in the top mining pools.
- Geographical distribution: The table also provides information on the region where the mining pool is located, reflecting the dominance of certain countries or regions in the Bitcoin mining industry, and can also observe the impact of policies, electricity prices and other factors on the distribution of mining pools from the side.
- Diversity and decentralization: While the top pools account for a larger share, the 23% share of the "other" category also shows that there is some degree of diversity in the market. This is beneficial for maintaining the decentralization and security of the network.
5. The evolution of mining machines to the present
Rental and sale of physical mining machines
- Sales: Manufacturers sell directly to consumers or through distribution channels. With the rise of the mining boom, there is a growing demand for high-performance mining rigs.
- Leasing: Individuals or enterprises can rent mining machines for a period of time to lower the entry barrier. Leasing services provide flexibility for users who do not have sufficient capital to purchase mining rigs.
Cloud mining services
- Purchase hash power: Users can purchase hash power provided by cloud mining platforms without having to directly purchase and manage physical mining rigs. This reduces the complexity and direct investment of mining.
- Hashrate leasing: Similar to purchasing hash power, but usually in a shorter contract, providing users with greater flexibility and a lower barrier to entry.
Mining machine hosting services
- Escrow Operations: Mining rig owners host their mining rigs to professional mining farms, where they are maintained and monitored by a professional team. This relieves individual miners of the burden of equipment management and optimization.
- Facility Rental: For users who want to control their own mining rigs but don't want to deal with hardware setup and maintenance issues on their own, they can rent the location and facilities of a professional mining farm.
Other Mining Services
- Repair and optimization: With the popularity of mining rigs, companies have emerged in the market that specialize in providing mining rig repair, upgrade, and optimization services to help miners keep their equipment in tip-top condition.
- Advisory Services: Provide industry knowledge, investment advice and risk assessment services to new entrants. These services are designed to help clients make informed investment decisions.
- Software solutions: Develop specialized mining software to improve the efficiency of mining machines, optimize the configuration of computing power, and provide data analysis, monitoring and management functions.
The importance of ecosystems
Building a healthy ecosystem of mining rigs is essential for the entire cryptocurrency mining industry. It not only enables participants to access resources and services more efficiently, but also promotes technological innovation and increases the competitiveness of the industry as a whole. At the same time, as the cryptocurrency market fluctuates, these services provide the necessary flexibility and adaptability to help miners and investors maximize profits and reduce risk.
6. Comparison of competition among mainstream mining machine companies on the market
- Core Advantages and Main Products: The core advantages of each company are reflected in their flagship products, such as Bitmain's Antminer series and Canaan's AvalonMiner series, both of which are known for their high-performance ASIC mining machines. NVIDIA and AMD, on the other hand, occupy an important position in the gaming and professional markets in addition to cryptocurrency mining with their GPU products.
- Market positioning: Bitmain, Canaan, MicroBT and Ebang are more focused on cryptocurrency mining hardware, while NVIDIA and AMD play a role in the broader field of high-performance computing, and cryptocurrency mining is just one of the application scenarios.
- Blockchain track layout: Although these companies have different main businesses, they are all seeking deeper development and application in the field of blockchain technology. The likes of Bitmain and Canaan are eyeing the expansion of blockchain technology in a wider range of areas, such as AI and global high-performance computing solutions, while NVIDIA and AMD support the diverse applications of blockchain technology through their GPU technologies.
7. Leader of service providers in the mining market
Conclusions and Analysis:
- Positioning as a market leader: Most of the listed companies are leaders in the blockchain and digital currency mining space with their specific technological advantages and market positioning. For example, Bitfury and Core Scientific represent innovation and specialization in blockchain technology and data center operations.
- The importance of environmental sustainability: Companies such as Hut 8 Mining Corp and Hive Blockchain Technologies emphasize the use of green energy for mining, showing a growing focus on environmental sustainability, reflecting the trend of environmental pressures and increased social responsibility faced by the cryptocurrency mining industry.
- Trends in Collaborations and Consolidations: As the industry grows, many companies expand their business scope and market share through collaborations or mergers with other businesses, such as Riot Blockchain, Inc.'s acquisition of Whinstone US, Inc., which marks an increase in the size and concentration of the industry.
- The rise of cloud mining services: The growing popularity of cloud mining services offered by companies such as Genesis Mining provides a low-barrier entry path for individuals and small investors into the cryptocurrency mining space, reflecting the increased demand for more flexible mining solutions that do not require you to configure your own hardware.
- Technological innovation and efficiency improvement: All companies are looking to improve mining efficiency and reduce operating costs through technological innovation, reflecting the increasing competition in the cryptocurrency mining space and the continuous pursuit of high-performance technology solutions.
8. Challenges and Risks and Opportunities
As cryptocurrency mining continues to grow, miners and investors face multiple challenges and risks, as well as opportunities:
- Electricity costs: Electricity is one of the biggest operating costs for mining. Low electricity price areas will bring significant cost advantages to mines.
- Regulatory risk: Cryptocurrency mining is heavily regulated by national policies, especially when it comes to electricity consumption and environmental impact, which can lead to the relocation or closure of mining farms.
- Technological Advancement: Mining machine technology continues to advance, and a new generation of miners will quickly make old equipment obsolete. Investors need to constantly update their equipment to stay competitive.
- Market volatility: The fluctuation of cryptocurrency prices directly affects mining income, and high volatility increases investment risk.
9. Forecast for the future development of the mining industry
- Shift to clean energy: With the growing concern about environmental issues, the use of renewable energy in mines will become a trend.
- Technological innovation: ASIC and GPU technology will continue to advance, and more efficient and energy-efficient mining equipment may emerge in the future.
- Changes in consensus mechanisms: With the popularity of consensus mechanisms such as POS, traditional POW mining methods may gradually decrease, which will have a profound impact on the mining machine market.
- Diversified services: In addition to hardware sales, mining machine companies may provide more one-stop services including hosting and cloud mining.
10. 投资者角度 (Volcano X Capital)
Early return on investment
Volcano X Capital has had a keen interest in the mining industry since its inception and has invested in the sector at an early stage, achieving good returns and returns with keen market insights and professional industry analysis. These success stories are a testament to Volcano X's forward-looking investment perspective and effective risk management strategy in the field of investing in mines.
Mining machine market analysis and forward-looking description
With the maturity of the cryptocurrency market, especially mainstream digital currencies such as Bitcoin are becoming more and more recognized by global investors, the mining machine market has also shown significant growth. Volcano X conducted an in-depth analysis and research on the mining machine market, focusing on the development trend from ASIC mining machine technology advancement to cloud mining services. From the continuous improvement of the hardware performance of mining machines, to the optimization of mining efficiency, to the improvement of the mining ecosystem, all these factors have jointly promoted the progress of the mining industry.
In the future, with the further application and expansion of blockchain technology and the improvement of the encrypted digital currency system, mining machines and related mining products will continue to benefit from the growth of the entire industry. In addition, as more countries and regions legalize digital currencies and establish regulatory frameworks, the market is expected to welcome a wider range of players and larger-scale investments.
The future development prospects of mining products
In the current bull market, the significant rise in the price of Bitcoin has brought a new round of enthusiasm to the mining industry. The high price of Bitcoin means that mining activities can bring higher economic returns, which attracts more investors and miners to the market, increasing the demand for mining rigs and related mining services.
Volcano X Fund believes that although the mining market will face multiple challenges such as electricity costs, environmental impact and policy regulation, the mining industry will continue to grow through technological innovation and adjustment of market mechanisms. In particular, technological progress in energy conservation, emission reduction and energy efficiency ratio will be a key factor to support the development of mining products in the future.
In conclusion, Volcano X Fund is actively optimistic about the important role of mining products and services in the future development of digital currencies, and will continue to leverage its in-depth knowledge and resources in the industry to explore new investment opportunities to achieve long-term capital appreciation. At the same time, the fund will also pay close attention to industry dynamics and policy changes, and flexibly adjust strategies to maximize market opportunities and manage investment risks.