More than 50 representatives from China's key mining equipment manufacturers held a first-of-its-kind, three-day gathering in Shenzhen this week, demonstrating just how integral the region is for the world's digital currency hardware infrastructure.
Initially billed as a 'private meeting', the event was perhaps most impressive due to the sheer number of industry representatives present. By one estimate, attendees accounted for 30% of the world's bitcoin hashing rate and 100% of the current scrypt-coin hashing rate, though other projections were higher.
One source told CoinDesk:
"People in that room represented over 50% of the world's bitcoin miner production."
Location, location, location
As analyst Tim Swanson wrote in his recent piece 'Bitcoins: Made in China', mining power is coalescing in China due in part to power costs, which are often subsidized and average around 8 cents/kWh (or lower if you have the right connections).
Proximity of mining farms to the factories assembling the hardware in Guangdong Province is also a bonus, reducing shipping times and costs.
In an industry where profits are made in the first three months of operation or never, deploying close to the assembly factories is vital.
Rivalry vs rationality
Participants at the meeting openly shared their experiences, despite the fierce rivalry and egos that exist in China's often cutthroat cryptocurrency mining industry.
An era of more rational competition had begun with less of the huge profits recorded in the past year, they said, along with greater transparency in operating and production costs.
Participants also agreed that hosted mining contracts would be the next trend in China, with prominent exchanges saying they would consider launching hash-rate exchange features.
Uniting the industry
Shenzhen-based technical news site Bitell noted attendees from all mining equipment manufacturers in China, including Avalon, ROCKMINER, AntMiner, HashRatio, Gridseed, SilverFish, Zeus, LK Miner, LightningAsic, BTCGarden and SmartMiner.
Also present were CEOs of bitcoin exchanges OKCoin, Huobi and 796.com, plus the founder of BTC China.
The gathering was orchestrated by Yangyang TV, a popular We-media (similar to YouTube) bitcoin live news channel in China.
"I wanted them to be friends, not enemies," said 'Chandler', who co-hosts Yangyang TV with his wife and is currently touring the entire country to meet everyone involved with bitcoin there.
Many of the participants were acquaintances of his before the event, Chandler said, and he realized that information-sharing could help advance the industry's cause.
It is once again plausible to speculate on China's role in determining bitcoin value. If bad news from China's regulators is enough to drop the price, and it frequently appears to, then continued absence of such news may allow some extra buoyancy.
Most major banks have closed accounts connected to bitcoin exchanges, though a few still remain open.
That said, neither miners nor bitcoiners in China are too optimistic at this point, thanks to obscure policies which could still have a great impact on the industry – as demonstrated by the roller coaster ride of the last few months.
With the price of bitcoin north of $500 on the CoinDesk Bitcoin Price Index again, mining returns to being a profitable endeavor. If it continues to trend $600 and above, Chinese and other mining equipment manufacturers could be in for a boom.
Shenzhen gets ready
ASICMINER has said it will order the equivalent of 30,000 TH/s of wafers each month. Furthermore, the Avalon fourth-generation 28nm chip is set to tapeout soon and AntMiner's S3 chips are projected to be out this July.
Beijing-Shenzhen company HashRatio actually has the first successful implementation of ASICMINER's third-generation 'Friedcat' (烤猫) 40nm chip in a 768 GH/s unit and are ready to produce them in volume right away, without the need to take pre-orders.
They will cost 6,800 CNY per unit (about $1,092) domestically, with a minimum order of 10 models. International pricing and shipping details have not yet been announced.
The battle for share of the scrypt-coin networks is about to heat up too, with at least four companies (Zeus, Gridseed, Innosilicon and Silverfish) apparently all ready to roll with existing inventory.
At stake is about 200 gigahashes-worth of total litecoin/dogecoin/etc mining power around the world, all still running on GPUs – but not for long.
This story was co-authored by Betty Zhang.