Blockstream ASIC Change Bitcoin Mining

Adding to a list of offerings that touch almost every aspect of the industry, infrastructure company Bitcoin Blockstream now plans to launch the “world’s first enterprise-class miner” in 2022. And, in addition to Being a huge challenge in itself, Blockstream hopes to improve the efficiency of mining platforms, meet major industry demand, and increase the decentralization of mining space in the process.

Acquire Spondoolies, Innovate ASICs

As part of a “friendly merger” with mining equipment manufacturing company Spondoolies, Blockstream is launching its new ASIC manufacturing arm and adding to an already diverse line of products and services, including mining and hosting (in Quebec, Canada and Georgia), the development of energy efficiency (via Blockstream Energy), a settlement sidechain project (the Liquid Network), investment products (via Blockstream Finance), as well as than the Blockstream Satellite.

For the latter range, Blockstream acquired both the intellectual property (IP) of Spondoolies and its core team to form its new mining hardware branch. Spondoolies CEO Assaf Gilboa takes the lead of Blockstream’s new ASIC division.

According to a recent announcement, since its founding in 2013, the Spondoolies team has designed and built five different mining products and was one of the first teams in the bitcoin mining industry to deliver high performance and energy efficient mining hardware. .

“Many consider the system design of Spondoolies and Enhanced Rack-Mounted Form Factor Miners to be the best-designed and best-performing series of miners on the market to date,” said Blockstream CEO Dr Adam. Back. Bitcoin Magazine.

And while Dr. Back doesn’t see much room for a major improvement in ASIC performance, he does see room for refinement, especially in the size of the chips used by these platforms.

“Hash functions like SHA256 are designed to be hard to find for computational shortcuts, so there is likely to be little room left for further algorithm optimization in the Bitcoin proof of work,” we said. -he says. “As ASIC technology goes from 7 nanometers (nm) to 5 nm and, in the future, to 3 nm chips, the power consumption and therefore the efficiency of miners improves over time. ”

ASIC size matters

Advancing this efficiency would be an achievement in high demand by the bitcoin mining market.

In its latest newsletter, Bitcoin mining company Luxor Technologies noted that as the hash rate begins to rebound following a crackdown in China, miners are looking for as much or more infrastructure space. that they are not looking for mining equipment.

“As more S19s and other next-generation platforms enter the North American market, industrial-scale farms are replacing older hardware with newer hardware wherever they can.” , according to the newsletter. “Space in the racks is scarce, so it makes more sense to fill the shelves with more efficient machines that can produce more hash rates while consuming less power (an S19, for example, has the same output than eight S9s and is approximately three times more powerful efficient). “

Compass Mining has also noted a trend towards more compact and efficient machines.

“Although prices did not fully recover from the market decline in April and May, aggregate prices for ASICs in secondary markets rebounded significantly in July and August,” wrote Zack Voell of Compass. “Machines with efficiency below 38 joules per terahash (J / TH) sell in the mid to upper range of $ 80 per terahash. Machines with efficiencies between 38 J / TH and 65 J / TH are back above $ 60 per TH.

These trends can only bode well for Blockstream’s new venture.

Moving forward, towards decentralization

The pressure is on Blockstream to produce and market bitcoin ASICs before the end of next year, but Dr Back is confident that they made the right decision by partnering with Spondoolies.

“Blockstream Partners with Spondoolies makes great business sense and combines Blockstream’s expertise in cryptographic protocols and algorithms, as well as enterprise hosting and mining operations with the best capabilities. design and manufacture of spondoolies miner systems, ”said Dr. Back.

Regarding the marketing strategy, Blockstream will emphasize the importance of decentralizing the supply chain outside of China and establishing a foothold in North America (at the start of 2020, 73% of ASIC’s manufacturing was in China. ).

“A differentiator for Blockstream miners is more international design and assembly, adding supply chain diversification and a North American supplier,” explained Dr. Back. “In the short term, miners are scarce, so we, like other mining companies, need to allocate miners strategically. Longer term, we would like to offer new product lines for sale to other miners and individuals around the world and support Blockstream Mining products like BMN [Blockstream Mining Note] and Blockstream Energy.

In a recent Series B round, Blockstream raised $ 210 million. The funding, backed by UK private equity firm Baillie Gifford and Hong Kong-based iFinex, which operates the Bitfinex cryptocurrency exchange, gave Blockstream a valuation of $ 3.2 billion.

While this assessment and Blockstream’s continued growth appears to be setting the stage for a public listing, for now, Dr. Back plans to continue innovating as the CEO of a private company.

“Our capitalization with round B is greater than that of some companies in the public market crypto sector,” he said. “We may consider going public in the future, but at the moment we have the flexibility and agility offered by operating as a private company and sufficient funding to accelerate growth. “

About Catherine Wilson

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