Most of the cryptocurrencies may have taken a hit in value in the past few weeks, but that has not stopped the industry from showing its influence in other avenues, and in some cases, it is more profound than anyone could have imagined. How much profit has Bitmain made?
One such instance came in the form of a recent report from Bernstein, a group of research analysts, which identified that the famous China-based cryptocurrency mining operation, Bitmain, surpassed one of the biggest names in the gaming industry in terms of annual profits for 2017.
This is not a small feat by any means, since the gaming giant in question is Nvidia, the brand that is synonymous with computer gaming chips and graphics cards.
How much profit did Bitmain make?
In its report, the Bernstein research group mentioned that Bitmain made off with at least $3 billion in profits in 2017, judging from conservative estimates of gross margin and operating margin, of 75 percent and 65 percent, respectively.
The report went on to state that the profits could actually go up to $4 billion, easily coming close to and maybe surpassing the profits of Nvidia, which reached this status after a little over 2 decades, as compared to how Bitmain achieved it in just “four years.”
Why compare these two and how do gaming chips relate to cryptocurrency mining?
Gaming chips actually have a history with cryptocurrency and especially Bitcoin mining.
Before specialized manufacturing operations such as Bitmain came into existence, Bitcoin miners used gaming computers for their day to day mining operations due to the high processing power of these machines.
But as the demand for Bitcoin increased, so did the required computing power, and there came a time when even the most efficient of gaming computers did not seem to be optimal for Bitcoin mining due to various issues, such as overheating of the machines and how they could not efficiently meet the hashing requirements of the Bitcoin network and the computing power that the operations required.
This issue led to the invention of specialized equipment, and thus the creation of specialized Application Specific Integrated Circuits (ASICs) led to replacing the more conventional graphics cards when it came to mining Bitcoin – by offering mining power that was ten to hundred times faster than conventional computers.
The ever growing need to meet the hashing requirements of the Bitcoin network coupled with the increasing number of Bitcoin miners led to an unprecedented demand of these ASIC chips, and companies such as Bitmain rose up with the required supply.
Since then, Bitcoin mining due to its hashing requirements demands so much computing power that gaming computers do not cut it anymore, and Bitcoin miners have primarily moved to ASIC chip-powered machines to carry out their operations.
If you consider these factors, then the idea of Nvidia getting strong competition by Bitmain does make sense, because while the former caters to an industry of professional and casual gamers all over the world, the latter caters to an industry of cryptocurrency miners – a segment which is more intent on making money than your everyday gamer, and which is open to the idea of spending more as investment which they can literally “mine” later (at least in the digital sense).
Wasn’t Bitmain affected by the clampdown in China?
While the Chinese government cracked down on cryptocurrencies and their operations, Bitmain, being a Bitcoin mining operation that also manufactured specialized chips for Bitcoin mining, remained clear due to the same technicality of not being one of the “restricted” operations.
However, since China could double down its efforts to stop cryptocurrency operations within the country altogether and go after mining companies, Bitmain seemingly has contingency plans in place with offices in Netherlands and Israel, with a planned expansion of its main operations to Switzerland.
For now, it seems that Bitmain could remain the ruling entity when it comes to manufacturing ASIC chips. However, while it continues to create strong competition for giants such as Nvidia – and with extension, AMD – Bitmain itself could see some serious competition from other big names in the technology industry.
Samsung could dabble in manufacturing ASIC chips
It was recently reported that Samsung has partnered with a company in China to start making its own ASIC chips. This was big news in itself since Samsung has one of the largest and most advanced manufacturing plants when it comes to semi-conductors – operations that it would most likely make use of while manufacturing its ASIC chips.
If the reported company that Samsung has partnered with is not Bitmain – as the possibility is highly unlikely – then Bitmain will certainly be required to put its best foot forward to keep its status as the primary provider of ASIC chips to the world.