Bitmain Escalates Bitcoin Mining Arms Race With Most Powerful Hardware In History

Bitmain Escalates Bitcoin Mining Arms Race With Most Powerful Hardware In History

The world’s largest Bitcoin mining computer manufacturer, Bitmain, just unveiled its most powerful machine yet.

The new miner, the Antminer S19XP, was officially announced at the company’s World Digital Mining Summit in Dubai this week. Bitmain’s fresh product offering is the newest addition to the S19 series, which launched in the summer of 2020.

The new machine is advertised to be 27% more powerful than the S19 Pro, the current flagship of the S19 series, while being 27% more energy efficient, as well.

Bitmain has started taking preorders for the machine with a starting price of $10,500 per unit (which is roughly 10-15% less than other top models), and it estimates that it will begin delivering the first batch sometime in Q3 of next year.

Broader Context: The Antminer S19XP Will Be the Most Powerful, Efficient Bitcoin Miner to Date

When looking at its specifications, the S19XP is a significant improvement on the existing S19 series.

The machine’s computing power clocks in at 140 terahashes a second (TH/s), which means it produces 140,000,000,000,000,000 guesses a second to find the next block in the blockchain. (A “hash” is a long alphanumeric number that is used to mine new bitcoin blocks; once the correct hash is produced, a miner claims the next block in the Bitcoin blockchain’s sequence).

For reference, the most powerful Antminer currently available, the S19 Pro, produces 110 TH/s, and Bitmain’s 2016 model, the still-widely-deployed Antminer S9, launched at 11.5 TH/s.

Even with this immense hashpower, the machine is also the most energy efficient of any miner on the market, consuming 3010W. This gives it an efficiency of 21.5 watts per terahash (W/TH), whereas the S19 Pro comes in at 29.55 W/TH. This efficiency comes from Bitmain’s use of TSMC’s 5 nanometer (nm) chips in its newest design, whereas previous S19 models used 7nm. Nanometers here refers to the size of the chip. The smaller the chip, the more transistors you can pack into the computer, which results in efficiency gains that reduces power consumption and heat build up..

If the S19XP was available today, it would be the most profitable machine on the market by far, beating out the revenue produced by the Antminer S19 Pro and Whatsminer M30S++, the current leaders in profitability, by over 25%

Given current levels of miner revenue potential (what we in the industry call hashprice), the Antminer S19XP would produce $53 a day per deployed unit. See chart below for how this would compare to other leading models.

Outlook and Implications: Will Bitmain Be Able to Deliver On Time?

Bitmain’s first round of preorders prices the S19XP at $75/TH. So at 140 TH, that means an initial sticker price of $10,500 a rig.

Notably, this is significantly less than the ~$105/TH that miners are paying in the ASIC resale market for other top-tier equipment, according to Hashrate Index’s Rig Price Indices.

The discount is included to compensate for the fact that these machines will have a lead time from ordering to deployment of anywhere from 7 to 10 months—potentially even longer if chip shortages and supply-chain bottlenecks throttle manufacturing output and delivery schedules. Miners have been wrestling with this issue enough this year; Marathon Digital Holdings, for example, took to chartering a plane to deliver a batch of machines when sea freight delays became untenable. Swiss miner BitRiver chartered its own planes for shipping, as well.

Decision Points: What Does this Mean for North American Miners?

Mining industry sources that the Luxor team has spoken to say that Bitmain has a production target of 20,000 Antminer S19 XPs a month. This could be more-or-less depending on a variety of logistical factors, and it remains to be seen how much China’s latest crypto and mining bans will constrict Bitmain’s production. Following the bans, Bitmain is reportedly shuttering its mainland China manufacturing capacity and fully migrating to its Indonesian and Malaysian factories,

With all of that in mind, Bitmain’s 20,000 target seems reasonable.

Assuming the manufacturer meets these targets, that would mean Bitmain could produce 280,000 S19 XPs before the close of next year. These machines would be capable of producing 39.2 exahashes a second (that’s 39,200,000,000,000,000,000,000). That’s roughly a 4th of the Bitcoin network’s outstanding hashrate today.

Most of these machines won’t be plugged in next year, though. If Bitmain’s production and delivery schedule goes as planned, the first batches will go online towards the end of Q3 and throughout Q4. But when they do come online, they will add heaps of hashrate to Bitcoin’s computing power, which could easily double next year.

Mega farms in North America and elsewhere will be the first to secure these machines. Once they come online in vast quantities and Bitcoin’s hashrate rises as a result, the increase in mining difficulty will obsolete older machines (like the S9 for e.g.) that have lesser efficiency and produce fewer hashes.

These machines will simply become unprofitable in all places except those with dirt cheap electricity rates. New generation and middle-of-the-road machines will still be viable, but less profitable.

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