Things haven’t been easy of late for Bitmain.
After CoinDesk revealed the China-based crypto mining giant was planning an initial public offering (IPO) for September, the company has faced a wave of perhaps unprecedented scrutiny. On social media, allegations emerged Bitmain was everything from insolvent to presenting a rosy outlook for its financials, all the while investors linked to the funding effort backed away from the deal.
Now it appears Bitmain is facing a new and well-capitalized competitor.
Revealed exclusively to CoinDesk, Bitewei, a Shenzhen-based mining chip manufacturer led by Yang Zuoxing, the former director of design at Bitmain, has raised 140 million yuan (around $20 million) to bring to market mining chips that long-time mining industry insiders believe could lead it to rival at least one area of Bitmain’s business.
Tyler Xiong, COO of the Bitcoin mining pool operator Bixin, which joined Bitewei’s initial investment, told CoinDesk that it believes the company’s Whatsminer line of mining chips to be “a game changer.”
Founded in Shenzhen in July 2016, Bitewei is now considered by some to be the most efficient hardware manufacturer on the market.
According to test results published by Bitewei, the upcoming WhatsMiner M10 is roughly 30 percent more efficient, in terms of electricity consumption than Bitmain’s most recent flagship product the AntMiner S9 Hydro.
Yang told CoinDesk Bitewei has so far received pre-orders of over 1,000 units of Whatsminer M10, a product scheduled to officially launch on September 19, but that started its pre-sale in mid August. With an average price around $1,600 depending on the shipping batch, the new product could already be generating a revenue beyond $1.6 million.
That said, Bitewei admittedly has a long way to go, as IPO materials suggest Bitmain controls 85 percent of the global cryptocurrency mining hardware market. Further, it has a well-developed software-based business, with its BTC.com and Antpool mining pools providing mining tools to 30 percent of the network’s miners.
This large market share is viewed with skepticism by cryptocurrency developers, who believe it conflicts with efforts to open access to cryptocurrency protocols and the digital monetary rewards they create.
As such, the fact that hardware distributors are already selling Whatsminer products has created excitement among those who believe the rise of additional, competitive mining chip providers could benefit the industry while better ensuring its ethos.
David Vorick, CEO of Obelisk, a company that set out to challenge Bitmain with an application specific integrated circuit (ASIC) miner for the Siacoin cryptocurrency, said he believes Bitewei proves that competition is possible, if difficult to achieve.
Vorick told CoinDesk:
“There should be a lot more players in the Bitcoin mining space and a lot more manufacturers, especially if we can figure out everything that Whatsminer is doing to get the efficiency gains that they’ve been getting.”
Others, however, say efficiency isn’t everything, and that Bitewei must still prove it can execute, avoiding the pitfalls that have seen other mining firms go bankrupt despite competitive products.
“It takes a lot, luck included, for a company to grow to that size and influence,” Xiong said, comparing Bitewei to Bitmain. “It’s hard for a new hardware company to get that influence now. Besides, there are only 4 million Bitcoins left to mine.”
Still, Bitewei’s test results suggest its product far exceeds the current norm.
Ahead of the Whatsminer M10’s formal launch, Bitewei kicked off the pre-sale by publishing two rounds of testing results on August 10 and 25, respectively. In both cases, Bitewei claimed the machine was performing at a level that consumed 66 watts to 68 watts of electricity per 1 trillion hashes (66W/TH).
In comparison, according to the official specifics published by Bitmain about its latest AntMiner S9 Hydro, the mining giant’s flagship product has a power consumption that’s around 96 W/TH.
Speaking of growing competition from other Bitcoin miners that recently launched products featuring 7nm chips, including Canaan Creative and GMO Internet, Yang said his next step is also to roll out a 7nm-chip Bitcoin miner in 2019.
Yet, Vorick said he believes Bitewei now has a considerable edge compared to both other startups and incumbent competitors, as Yang’s 50-people team combines experience with cutting-edge chip designs.
“It seems like the majority of the design talent at Bitmain is now at Whatsminer [Bitewei],” Vorick said.
Perhaps that’s why Yang doesn’t appear deterred by fierce competition during the summer’s overall bearish crypto market, with Bitcoin‘s price sliding below $7,000. “The market always has ups and downs and 2018 is somewhat like 2014, during which the Bitcoin price kept declining for a year,” Yang told CoinDesk.
“Nothing can stop the enthusiasm for people inside the…