Marc Andreessen Predicts Bitcoin Will Change Chip Design Forever
Silicon Valley venture capitalist Marc Andreessen believes digital currencies will transform the way we design processors.
Silicon Valley venture capitalist Marc Andreessen believes digital currencies could change the way processors are designed.
doesn’t exactly need an introduction. An avid bitcoin advocate, he tends to be quite outspoken – putting his money where his mouth is through investment firm Andreessen Horowitz.
Turning data centres into mining rigs
Speaking at the Open Compute Summit last week, Andreessen said that mining is at the heart of bitcoin, as it handles all computation needed to maintain the trust network, reports TechWeek Europe. He added:
Andreessen added that cryptocurrency mining is a “very big thing” and that we are still in the very early stages of it. This is where Andreessen sees an opportunity for chipmakers.
Custom mining chips are nothing new, but few people expected the rise of ASICs to transform the mining scene in such a short time. Andreessen believes custom chips will dominate mining for quite a while, but things could take another unexpected turn.
Andreessen told the gathering that his company has already received pitches for bitcoin optimised data centres. However, it is unclear what such pitches would entail in terms of hardware.
Using standardised server racks to add a bit of mining power to existing data centres is one option, as it would essentially add a few ASICs to a huge data centre.
Another farfetched scenario would be the emergence of custom chips that can deal with standard workloads and mining. In theory, this could be done by adding specialized circuits to x86- or ARM-based server parts, but it is simply not practical for the time being, either on-die or in the same chip package.
Opportunities and pitfalls
Although Andreessen is rather optimistic, there are quite a few problems with bitcoin mining hardware that may keep it out of data centres for a while. Economies of scale are the most obvious challenge, the sheer pace of development is another.
Using existing infrastructure for mining is a tantalizing prospect, but with huge performance gains offered by every new generation of ASICs, deploying bitcoin mining hardware in a server setting would be a rather risky investment.
Once the hardware goes out of date, it would practically become a useless drain. Chipmakers go to great lengths to shave off a few watts from their server processors and to increase their life cycle by making them future proof, thus reducing the total cost of ownership. Adding bitcoin mining features to them could have the exact opposite effect.
In addition, the market for bitcoin mining hardware remains limited. Wedbush Securities estimates that the total market for bitcoin mining hardware stood at $200m in 2013.
It isn't a small market, until you compare it to overall semiconductor sales. To put things into perspective, Gartner puts the revenue generated in the server space in 2013 at more than $12bn a quarter.
Image Credit: Fortune Live Media / Flickr
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.