When it was announced that Intel, one of the planet’s biggest computer chip manufacturers, could very well introduce an application-specific integrated circuit (ASIC) oriented for bitcoin extraction at the International Solid-State Circuits Conference (ISSCC), a worldwide forum for demonstration of breakthroughs in solid-state circuits and systems-on-a-chip to be held online later this month, the first rational inference was that the corporation would be introducing a new chip it had created.
In a statement provided with Bitcoin Magazine, an Intel spokesperson stated that the business has been working on SHA-256 optimised ASICs “for several years” and that the firm will not introduce a new ASIC at ISSCC.
“The SHA-256 ASIC referred to in the paper being presented at ISSCC … was our first generation product exploration from 2018,” the Intel statement said.
Intel will show off advancements in its bitcoin mining solid-state circuit designs since the patent was submitted, but will not show off a whole new ASIC. GRIID’s acquisition, on the other hand, is for a new chipset which is yet to be unveiled.
“The supply agreement released as part of required [U.S. Securities and Exchange Commission] SEC disclosures from our customer concerns the second-generation ASIC for which we will provide more details soon,” the Intel representative added.
Bitcoin Magazine spoke with Fred Thiel, CEO of Marathon Digital Holdings, one of the world’s largest publicly traded bitcoin mining businesses, to learn more about the industry’s present issues and what might be done to address them in the near future.
“The only reason Bitmain has the position they have today is because of the availability of miners,” Thiel added. “If there were no constraints on a basic way for starts at the foundries, you would see many more people in this industry and Bitmain would be one of many brands, and the competition would be around performance and cost of ownership, not around availability.”
Furthermore, Bitmain seems to have been equipped to supply the world’s most energy-efficient miners, meeting a demand indicated by bitcoin mining businesses who are constantly chasing down the energy curve.
COULD INTEL PROVIDE A SOLUTION?
“It’s about removing the constraints in the industry that existed and the kind of monopoly, or quasi-monopoly, that Bitmain has,” Thiel told Bitcoin Magazine, adding that Intel’s introduction as a new merchant silicon vendor “is good” as “it is a new foundry capacity.”
“So, it means more overall capacity in the marketplace,” Thiel said. “Now that Intel has come out and started talking about it, you’re going to see other people wanting to protect their potential for market share by saying that they’re going to be in the market too.”
Thiel did not elaborate, although he insinuated that there have been three U.S.-based firms that already have completed ground-up models and two more that are trying to work on them. He also mentioned that ASIC production and design are being studied by teams from prominent universities.
“And as hosting becomes more available because everybody is building out hosting capacity, I think what you’re going to find is there will be very little constraint around the growth rate of the global hash rate,” Thiel said. “Hardware will be readily available, hosting will be available and then it’s just a question of where is the price of bitcoin that is economically feasible to mine, and what price are you willing to pay to be in business today versus tomorrow versus next year?”
A STEEP RISE IN GLOBAL HASH RATE
If some of the industry’s limits are eliminated, Bitcoin’s hash rate might skyrocket. As a consequence, as the bitcoin-producing industry becomes more intense, profitability for new competitors trying to mine BTC will dwindle, necessitating firms to have a larger percentage of the worldwide hash rate to stay in business.
“It’s an arms race; there are only 900 bitcoin made per day currently, and there are a lot of people with a lot of capital chasing that,” Thiel told Bitcoin Magazine.
“I think you are going to see growth in some of these hash rate derivatives,” Thiel said. “And as more demand for hash rate futures grows, then you’re going to see industrial miners selling portions of their hash rate for a few months to finance miners or other equipment, and that will be a way that people can play in this industry without even having to buy miners, they can just buy hash rate.”
Buying hash rate allows miners to contend for block rewards without having to lease a large physical area, secure 24/7 reliable hosting, or purchase a lot of hardware upfront.
“At the end of the day, are you mining because you want to heat up your garage or are you mining because you want to earn bitcoin? And how do you want to go about paying potential for passive income relative to bitcoin mining? Do you want to do it as an investor by just buying hash rate futures, or investing in a public miner, or do you want to buy miners yourself and mine?” Thiel asked. “I think everybody is going to have to make that decision on their own and figure it out.”