What it Takes to Design the Next Big Thing in Mining Hardware
We ask Butterfly Labs what it takes to build successive generations of bitcoin miners in such a fast-paced industry.
![chip](https://www.coindesk.com/resizer/GU4Q7DKBM5BmWyftN7qURm3yd_4=/567x378/filters:quality(80):format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/B3AMR7HRMJAFRLUO5EEIEXL5VU.jpg)
So you think it’s difficult to keep up with the breakneck pace of cryptocurrency mining from your home PC? Imagine what it’s like being in the business of building the next generation of bitcoin miners, when difficulty increases exponentially, chip R&D seems painfully slow, and customers constantly want more bang for their buck.
That’s what Kansas City-based Butterfly Labs has to contend with on an ongoing basis. Once a product is complete, you can’t sit around and enjoy your accomplishment, it’s time to move on to the next one.
“By the time you get a product flowing smoothly, it’s already at the end of its life,” explained Josh Zerlan, product development VP at Butterfly Labs.
“From when we start writing down the specs of the new product to when it is done and we’re no longer selling, it’s a six-month timeframe. And that’s completely unheard of [in product development]," he said.
Data centres beckon
Butterfly Labs has been the subject of a fair bit of negative criticism, with some extremely unhappy customers. Zerlan claims this is all part and parcel of the competitive industry BFL exists in.
He said one of the company’s product issues has come from a problem sourcing power supplies.
“I actually ran our RMA [return merchandise authorization] numbers a couple of weeks ago and it was about a 1.22% failure rate. And the majority of those are due to the power supplies. We’ve been trying to address it, and get higher quality PSUs,” Zerlan said.
The company has long believed that bitcoin mining would eventually move into the data centres, rather than being based in small localized operations. That way, IT professionals can make their own choices about power supplies or other aspects of their setup.
For this reason, the company’s new 28nm Monarch miner will slot into a rack like a blade server.
“That’s one of the reasons we went the Monarch route, where we’re not going to provide the power supply anymore,” Zerlan explained.
![The Monarch miner – designed for a rack, not a desk.](https://www.coindesk.com/resizer/6_7RnnDLyy54aJ-RorJnwCuy-xo=/560x305/filters:quality(80):format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/YQ5ROV6Q6ZGVRAC3KT7F24YG6Y.jpg)
The new card is capable of different configurations – as a chained USB peripheral, for example.
“Because there are so many varied installations, people have different requirements. One power supply doesn’t necessarily work for everybody. It's much easier to just leave it up to the customer to [customize] their own installation,” he said.
Keeping cool
The Monarch has been designed for larger-scale applications, rather than home setups, said Zerlan.
“It’s more of an add-on card, intended to go into a data centre, in an industrial-scale application. It’s for people who are going to pack it in in high densities – especially the water cooled version.”
As Zerlan suggests, there will be two models of the Monarch: one will be a covered water block, the other is air-cooled.
![Water runs through a radiator(seen left). This cools the unit via the piping seen on the board.](https://www.coindesk.com/resizer/hxKVqvzD_GUKlMtvj9KnRjkSCzg=/560x296/filters:quality(80):format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/HRX4RIR7JFEVFJDQF24RADQY3Y.png)
“[Water-cooled models] require a little more maintenance, but with our closed loop system, the solution will be pretty much maintenance-free,” said Zerlan.
“You will have to find somewhere to put the radiator. It’s a little more complicated than air-cooled, but you get much better performance because water carries heat far more effectively than air.”
Retail routes
Butterfly Labs’ main competitors are currently KnCMiner, HashFast and CoinTerra. Unlike those companies, however, BFL is going retail. It already sells units via TigerDirect, something the company set up just a few weeks ago. “We are negotiating with several other retail channels too,” Zerlan said.
The company displayed its products at the Consumer Electronics Show in Las Vegas in January, with retailers showing keen interest.
Setting pricing and designing an attractive package has been challenging for BFL. Supporting end-users and creating retail-oriented packaging is “actually a huge undertaking”, Zerlan said. “We’ve been having to scramble to figure out how to make it work”.
However, BFL is determined to sell at the retail level and now has the staff and logistical expertise to bring this about. “We are in good position to deliver to these (retail) companies, but they don’t want one or two units – they want hundreds,” Zerlan said.
![The front hall at BFL. The offices are overfilled with components due to the company's hectic pace.](https://www.coindesk.com/resizer/On3yQnqskJuBkJPkikR6-PNXhCg=/560x359/filters:quality(80):format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/RGVFLPJ74RGVDCJHTX7AM6YCKI.png)
The next node
To speak of a ‘node’ in bitcoin mining is to refer to the size of the ASIC chip used. BFL came to market with 65nm-node miners. Its next generation will be down to 28nm. The one after that is likely to be 14nm.
“Right now Intel is working on 14nm. We’ll probably move to that at some point,” Zerlan said.
“People are now starting to experiment with 10nm. Once we move to 14nm, there will be a 12-month break in the cycle of constant upgrades waiting for [development of the] 10nm,” he said.
The smaller the chip, the more efficient it becomes, although the returns do diminish when shifting to smaller nodes.
“Running the numbers, I think what we’re going to see is 28nm being the most cost-effective node level. As you jump down to 14nm, your gains are much less, but your costs increase dramatically,” said Zerlan
“So it’s actually cheaper to build a 28nm and just build more of them, than it is to build a 14nm. I think 28nm is going to have a lot more life that people think it will," he said.
Different configurations of 28nm nodes could also be used to squeeze out more power: more chips to a board, say, or a greater chip surface area.
![BFL product testing area.](https://www.coindesk.com/resizer/SSQrJMd0dw-cc6ziqXdKlcBDIrY=/560x419/filters:quality(80):format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/SEOG4FBSIBDFVDNKXFCVVTNJ7A.png)
Digital gold rush
The bitcoin price spike that happened near the end of 2013 created an increased fervour for mining the digital currency. When asked what might happen in the mining industry if bitcoin should ever hit $5,000 per coin, Zerlan said he believes interest would rise dramatically.
“They are going to be like ‘I don’t care what it is, as long as its hashing, I’m going to buy it’,” he said.
“That’s what happened with our 65nm (products): the price blew up and we went from expecting 3,000 to 4,000 orders in total over the life of the entire product to 50,000.”
If the price of bitcoin does hit $5,000, the same increase in demand is likely to happen again. For BFL, having retail channels in place means that the company still believes in the future of consumer-based BTC mining.
There will always be a place for the consumer mining market, Zerlan thinks:
What Zerlan is referring to is the replacement for the consumer-oriented Jalapeno miner. The NimbusMining concept is an upcoming device that allows mining enthusiasts to have fun with being a part of the bitcoin ecosystem.
“It’s basically cloud hashing. It is an interface to that,” Zerlan explained. “You can buy anywhere from 1 GH/sec up to the TH/sec level if you want. You can set it on your desk[top], it doesn’t use a whole lot of power, doesn’t make any noise, and you can watch what’s going on." He summed up:
That statement could sum up the future of bitcoin mining for most people. In the end, the hardware race may mostly run in the data centre. At the same time, hashing will be through cloud-based devices, keeping individuals involved at the consumer level.
Disclaimer: This article should not be viewed as an endorsement of Butterfly Labs. Please do your own research before considering investing any funds in this service.
Chip image via Shutterstock