The ongoing transition of processing power from the PC to the Enterprise Datacenter and then to the hyper-scale cloud, is being joined by a new processing category. The meteoric rise of the value of Bitcoin has a significant impact on the Semiconductor Processing revenue. Although from a small base, the processing mining revenue has grown over 500% year over year, dominated TSMC customers and Nvidia. In Q4 the Cryto Mining share had risen to over 3% of the total processing market.
(Q4-17 numbers lack companies that have not yet reported – will increase PC and DC but not Crypto)
Already a key memory supplier to the Cryptocurrency mining market, Samsung is preparing to act as manufacturing foundry for the ACIS’s needed for processing. This might not be a major surprise but the statements that this is going to be a cooperation with TSMC does not make immediate sense. Samsung and TSMC are competitors in the foundry market and TSMC is without rivalry the largest manufacturer of processing ASIC’s to the Bitcoin mining market. Why should they “collaborate” with Samsung?
Bitcoin miners have traditionally been using Grapics Cards as they are better suited for mining that traditional server and PC processors. This has benefitted both AMD and Nvidia that has been the main suppliers of the cards to a level where there is a shortage. In order to protect its graphics customers, Nvidia has created and sold dedicated mining platforms during the last year but have stated that Bitcoins are best mined by specialised ASIC’s. This is confirmed by the rise of specialised mining rig manufacturers using proprietary ASICS’s. The main foundry for this activity has been TSMC that were willing to share their Crypto revenue figures last quarter but did not want to disclose them in Q4. This is likely as a result of the pending “collaboration” with Samsung. It is obvious that this is not in TSMC’s interest and that they are not doing this voluntarily.
The reason for the cooperation is in our opinion driven by TSMC’s customers and more specifically by the largest Bitcoin mining Company, Bitmain Technology Inc. The company is claiming to deliver 70% of all the mining rigs to the Bitcoin miners and have had all of their BM1384/7 chips made on the TSMC 16nm process. Delivering in excess of 200K units a year with 100+ ASIC’s in each, they are likely behind most of TSMC crypto revenue. We believe Bitmain is now buying for more than 1.5B$ yearly run rate with TSMC and is now so powerful they can force TSMC to help Samsung 2nd source their ASIC’s. This could have a significant impact on both TSMC’s and Samsung’s revenue if the Bitcoin valuation stays high.
The top Bitcoin Mining ASIC companies:
Bitmain: Incorporated in Hongkong, the Beijing startup Bitmain Technologies Ltd is controlled by a trust in the Cayman Islands. Bitmain designs the silicon that goes into its bitcoin mining rigs, assemble the machines, then sells them to customers around the world. It also operates the machines for its own account, runs vast bitcoin mines that it rents out on contract to others, and, finally, manages several of the world’s largest mining “pools”—agglomerations of processing power so huge that they greatly improve the odds of successfully mining a bitcoin block. Bitmain manages Antpool and BTC.com, account for 28.9% of all the processing power on the global bitcoin network. Last four days results shown below.
Bitmain produces and sells hundreds of thousands Antminer rigs a year. According to Bitmain, they sell 70% of all mining rigs to the market, effectively providing 70% of all the processing power on the network. The latest Antminer rig is based on the BM1384/7 chip.
BitFury: Bitmain considers BitFury their main competitor. Although predominately a blockchain company, BitFury also delivers hardware for bitcoin mining: BitFury is basing their hardware on a proprietary 16nm ASIC manufactured by TSMC called BF8162C16
Canaan: Another Beijing company creating mining rigs based on their Avalon Blockchain ASIC