- Block announces mining breakthrough in chip technology.
- The company intends to take on the mining equipment industry.
- Bitmain dominates the mining hardware sector.
Bitcoin mining has evolved into a capital-intensive endeavor, increasingly favoring actors with deep pockets and access to low-cost energy. The recent halving event, which slashed mining rewards, has further squeezed profit margins, making operational efficiency even more important. As a result, the mining landscape has trended towards more centralization, with only the most well-resourced companies able to compete.
Against this backdrop, Jack Dorsey’s Block unveiled ambitious mining plans to disrupt the Bitcoin industry. Armed with a state-of-the-art 3nm mining chip and plans for a vertically integrated business model, Block intends to shake up the Bitcoin mining industry.
Block Mining to Shake Things Up
In a bid to turn Bitcoin mining on its head, Block recently announced finalizing the design of its 3nm chip. The company stated that it intends to offer both the standalone 3nm chip and an integrated, proprietary Bitcoin mining rig.
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However, in a move that is sure to stir things up further, Block also revealed plans for an end-to-end solution encompassing the entire mining rig lifecycle. From miner procurement and setup to operational software and post-sale support, the company will offer a vertically integrated package tailored to suit miners’ needs, in contrast to current offerings.
Block has actively engaged miners to identify friction points across key areas such as purchasing, reliability, maintenance, software capabilities, transparency, and aftermarket service. By soliciting this information, the company hopes to address longstanding industry challenges to steal a march on competitors.
Bitmain is Number One
Block’s ambitious mining plans intend to one-up existing hardware manufacturers. While the hardware mining industry features many companies, including Canaan and MicroBT, it is Bitmain that dominates with an estimated 75% market share in 2021 according to market research firm Frost & Sullivan.
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Bitmain products are ranked consistently highly, such as a recent Koinly review rating the Antminer S21 Hyd top choice when accounting for hash rate, power consumption, and cost.
While Bitmain products seemingly offer the optimal combination of specs against price, the overall user experience could do with improvement. Bitmain products are often sold out with long wait times for restocking. Additionally, post-purchase, buyers are largely left to fend for themselves, facing non-negotiable policies on order changes, warranty transfers, and poor customs clearance assistance.
On the Flipside
- Increasing mining decentralization is crucial for Bitcoin‘s long-term security and resilience.
- Hashing power is also a highly centralized process with the AntPool and Foundry USA mining pools controlling a combined 48% of the hash rate over the last 10 days.
- Environmental concerns around Bitcoin mining continue to surface.
Why This Matters
Whether Block’s foray into mining can break Bitmain’s stranglehold is too early to tell at this time, but the Bitcoin mining equipment industry is ripe for a disruptive competitor to muscle in.
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