Written by: Jaleel, BlockBeats

Edited by: Jack, BlockBeats

While the news of SEC's victory in the grayscale first battle on the other side of the ocean is still fermenting, the release of Huawei's new flagship phone, Mate 60 Pro, has caused a stir in the technology market. A message about a Chinese mining company being the "savior" and promoting the 7nm chip of SMIC has spread in the community.

SMIC's 7nm process emerges, mining companies back in the spotlight

Behind the release of Huawei's new products, there are market rumors that due to technical issues with SMIC's 7nm chips, its final output may be limited. It is not yet clear whether SMIC's N+1 and N+2 processes are equivalent to the 7nmT process on the market. However, the industry has reason to believe that its N+1 process should be equivalent to the 7nm LPE process, while the N+2 process should be comparable to the 7nm LPP process.

As the only company in China capable of mass-producing 14-nanometer FinFET technology, SMIC's N+1 and N+2 processes are both derived from further optimization of the 14-nanometer FinFET technology. By using DUV lithography technology, SMIC has successfully circumvented US technology sanctions. Although the most advanced process currently uses EUV lithography machines, some companies are still exploring improvements based on the 14nm process, such as Apple, whose experimental results have not met expectations and have been dubbed "electronic waste" by the industry.

For the 5nm technology, although the technical barriers of its process are not absolute, its yield is a huge challenge. Recall that Samsung only had a 60% yield rate under the 7nm technology, which means that up to 40% of the products need to be eliminated. Even if it is possible to directly leap from the 14nm technology to the 5nm technology, the challenge of its yield rate may require huge capital and time to overcome.

The choice of technical process determines the upper limit of the product. Although this may not affect market promotion, for experts in the industry, choosing a process without paying attention to power consumption is no different from deception.

Regarding the question of whether SMIC's 7nm chips can be mass-produced, BlockBeats also interviewed Maxwell. In the interview, Maxwell stated that the development of 7nm chips is very difficult and is indeed a bottleneck. However, by 2021, SMIC's N+1 7nm technology has become mature and is preparing for large-scale use. Now, two more years have passed. As a contract manufacturer for Huawei and a top domestic enterprise in the chip industry, SMIC has orders to fulfill and will not be without progress and breakthroughs. Therefore, the news of mass production now has a basis.

According to the MinerVa Semiconductor website, this IC has been shipping as early as July 2021, indicating that SMIC had the ability to mass-produce the 7nm process as early as the beginning of 2021. After Huawei's sudden release of the Mate 60, the mining companies that had disappeared for a long time have once again entered our sight.

The opinion of the super lord of the Benmo community on this matter has pushed the story of Zhongxin International's 7nm chip to a new climax in the currency circle.

Although the facts may not necessarily be exactly as everyone says, it is clear that the contribution made by the encryption mining industry to the chip industry is not insignificant, and this contribution must not be underestimated.

What impact do mining companies have on the chip industry?

As the technology and digital industry reviewer said, mining machines are the best orders for Fab to practice on. We really have to thank the miners for their unintentional contribution to the development of Zhongxin International's 7nm chips.

Then the community members began to reminisce about the past. In 2021, the Federal Reserve began unlimited QE, and virtual currencies began to skyrocket. Mine owners were dissatisfied with the low computing power/energy consumption ratio of traditional graphics card mining, so they ordered dedicated mining machines from specialized mining machine manufacturers. At that time, TSMC and Samsung were both supplying N A, and they didn't even bother to look at it. So the mining machine manufacturers turned to SMIC, which had just successfully tested the 7nm process. This 7nm process was far inferior to Samsung's 8nm process at the time and was an improved version of the duv 14nm process. However, in this strange economic environment, SMIC eventually delivered the goods to the mining machine manufacturers (earning enough money to cover the low yield). So, this somewhat accidental move led to the continuous updating of the 7nm process, ultimately leading to the K9000s on the Huawei Mate60pro today! It can be considered a significant breakthrough.

Since the birth of mining machines, the domestic market has been basically monopolized, forming a four-party pattern: Jianan Yunzhi, Bitmain, Bit Micro, and Ebang International.

Bitmain was co-founded by Wu Jihan and Zhan Ketuan in 2013. In a short period of time, the company launched the Antminer S1 miner based on the 55nm chip BM1380, which opened the door to its rapid growth. In 2014, it further released the Antminer S3 miner based on the 28nm chip BM1382. In addition, the company also provides a variety of mining-related services and products.

In 2011, Zhang Nangeng appeared on the Bitcointalk forum under the name "ngzhang" and quickly launched China's first FPGA miner - Icarus and Lancelot. As a result, he was affectionately known as "Pumpkin Zhang". When Butterfly Labs announced the development of ASIC miners in 2012 and claimed to only use them for their own purposes, Zhang Nangeng decided to personally enter the market to stop the monopoly of Bitcoin computing power. He gave up his studies and focused on the development of ASIC miners. In 2013, he founded Canaan and launched the first ASIC miner of Canaan - Avalon. After many efforts, in 2019, Canaan successfully landed on NASDAQ and became the "first domestic mining stock".

Bitmain was founded in July 2016 and was the latest company to enter the market compared to the other three companies. Bitmain's founder, Yang Zuoxing, actually entered the mining circle as early as 2014. After experiencing the "roasting cat run" incident and the "Bitmain equity dispute" incident, he decided to start his own company and establish Bitmain. Its mining machine brand, "Shenma Mining Machine", also saw its market share soar after its launch, and began to try to compete with Bitmain with its high cost performance. In December of the same year, its developed 28nm chip BT1000 was officially released. In April 2017, Bitmain's Shenma M3 mining machine was officially put into production, with the first batch of M3 mining machines selling nearly ten million yuan.

The story of Yibang International began in 2010. Initially, the company focused on the communication equipment business, but its founder, Hu Dong, became interested in Bitcoin early on. In 2014, when the communication industry was in a downturn, Yibang International entered the mining machine business. After nine versions of improvement, the mining machine product was successfully launched in 2016. After successfully listing on NASDAQ on June 26, 2020, it became the "second largest domestic Bitcoin mining machine stock" and has gradually disappeared from the market.

Transfusion Chip "Volunteer"

By the end of 2020, BTC.com's global computing power statistics revealed an interesting fact: in recent months, computing power above 80TH/s accounted for 16%, while computing power above 60TH/s accounted for 27%. This means that a large number of new generation 7nm or 8nm Bitcoin mining machines have been put into use.

Related reading: "2020 Annual Mining Ecology Review: Changes in the Mining Machine Market Landscape".

The chip manufacturers behind the scenes have also formed a three-party competition: TSMC, Samsung, and SMIC.

In January 2013, the birth of Avalon mining machine meant a significant increase in computing power, even leading the entire industry into the ASIC era. It was also in this year that Bitmain emerged and quickly gained prominence, forming a close partnership with TSMC.

For a long period of time afterwards, the global market is currently facing a shortage of chips and a situation where supply cannot meet demand. However, TSMC has an endless amount of business to do. Behind all of this, it is thanks to the power of Bitmain. As early as the second half of 2017, Bitmain became TSMC's second largest customer in China and was included in TSMC's list of major customers, receiving a large number of orders from Bitmain every year.

In 2021, TSMC released its Q4 and full-year financial report, showing a record high revenue of $15.74 billion. It is worth noting that Bitmain's orders to TSMC reached 50,000 pieces in the second half of that year, estimated to bring in $1.2 billion in profits. At that time, some media reported that TSMC attached great importance to this and even sent senior executives to Japan to purchase key equipment for the order.

However, with the decline in Bitcoin prices and restrictions on mining in China, Bitmain's order volume has decreased, which has had a certain impact on TSMC's operational capacity. Nevertheless, Bitmain remains one of TSMC's major customers, maintaining a position in the top ten.

Returning to the back of Huawei's new flagship phone, the Mate 60 Pro, is the Zhongxin International 7nm chip. In 2020, Zhongxin International announced for the first time that its products were being used in mass-produced cryptocurrency mining machines. According to reports at the time, Zhongxin International had completed testing of its 14nm mining machine chip in collaboration with Canaan Technology and would begin mass production in the second quarter of 2020. The specific type of chip or the mining machine for a certain small currency is unknown. The highest chip process that Zhongxin International could provide that year was 14nm, and it was expected to begin trial production of 7nm in the fourth quarter of 2020.

According to industry insiders, in 2020, it is not the first time that SMIC has attempted to enter the mining machine industry. As early as the beginning of 2018, SMIC had cooperated with a well-known figure in the Dongguan cryptocurrency circle. However, due to the sharp drop in the price of Bitcoin and subsequent withdrawal of investment, the chip was designed but not put into mass production. SMIC has been actively trying to enter the mining machine industry and has also cooperated with other mining machine manufacturers, but has not yet produced mainstream models.

Low Voltage Chip "Pursuer"

The core technology of mining machine chips at that time was focused on two main directions:

Firstly, the calculation of SHA256 is in fully customized mode. The so-called fully customized mode is not obtained by synthesizing circuits through hardware description language, but by manually customizing the macro module of SHA256 calculation directly through AND gates. Then, these macro modules are replicated tens of thousands or even hundreds of thousands of times within the same chip to achieve high-speed processing capability.

The second is low voltage technology. Since Bitcoin chips need to work all the time, clock gating and partial power domain are useless. Low voltage is one of the core technologies of Bitcoin chips. The dynamic power consumption operating frequency (F) of the chip and the square of the power supply voltage (VCC^2). The frequency cannot be reduced, otherwise mining will be slower. Therefore, low voltage is the core technology of Bitcoin chips.

At that time, Jianan Technology also issued a statement saying that process technology is only one factor in the performance of top chips. Therefore, Jianan Technology has made a lot of efforts in low voltage, standard circuit unit design and optimization, high-performance computing, and heat dissipation solutions, and has accumulated a lot of underlying technology.

Bitcoin miner peicaili (@pcfli) believes that low-voltage technology has also been extended to other industries such as mobile phones, benefiting the entire chip industry greatly.

NVIDIA Graphics Card "Savior"

On May 19, 2017, the price of Ethereum broke through the $100 mark for the first time, signaling the start of a new cryptocurrency bull market. The most impressive trend during this bull market was the prevalence of ICOs.

During this period from 2016 to 2018, Nvidia's market value increased from $14 billion to $175 billion, a staggering ten-fold increase in just two years, leaving all investors in awe. In 2017 alone, Nvidia's revenue reached $9.714 billion, a 40.58% increase from the previous year. It's safe to say that the crypto bull market in 2017 brought Nvidia significant and substantial returns.

Ethereum uses the Ethash encryption algorithm, which requires reading and storing DAG files in the mining process. Since the bandwidth of each memory read by a computer is limited and it is difficult for existing devices to make breakthroughs in this technology, no matter how much a miner improves their computing power, the mining efficiency will not be significantly improved. This gives Ethereum's PoW mechanism "anti-ASIC" properties.

It can be said that Ethereum, the world's largest decentralized development network, has created an incredibly huge market for Huang Renxun's graphics card sales, and even helped completely rewrite Nvidia's life curve.

NVIDIA has launched a GTX 1060 6GB graphics card specifically for Ethereum mining, which removes the output interface. The first batch of supply was 300,000 units, and later even stopped the normal market supply of graphics cards with output. At the end of the year, the performance of the graphics card was optimized for mining, and a series of professional "mining cards" with stronger computing power and lower prices, such as P106 and P104, were launched. This series of graphics cards even lacks IO output interfaces, and users cannot even use them to play games.

In order to seize the chip supply of the mining market, Nvidia even cooperates closely with its arch-rival AMD, accelerating the research and development as well as production of "mining products".

In 2018, NVIDIA's CFO publicly disclosed the fact that he made money by selling "mining cards", while Huang Renxun revealed his "interest" in the mining industry in his speech: "NVIDIA actually controls the purpose of users buying GPUs... We must pay attention to its existence (users buying graphics cards for mining) and ensure sufficient inventory to cope with it."

As Ethereum welcomed its second mining boom, Nvidia did not disappoint and did not miss the start of a new bull market, once again taking action. Under the pressure of global chip shortages and player demand, Nvidia developed the CMP series mining cards for graphics card miners. In order to achieve the highest mining efficiency, CMP directly abandoned the graphics processing function. Later, under pressure, it announced that the newly launched GeForce RTX 30 series graphics cards would limit mining performance, causing graphics card prices to soar again.

Huang Renxun displays RTX 30 series graphics cards, image sourced from the internet

At this point, the price of Ethereum has approached $3000, and the merge of PoS is no longer seen as a potential threat in the face of rising prices. Huang Renxun has become a strong advocate for cryptocurrency, publicly expressing his long-term optimism about the market boom and the value of blockchain. Miners also agree, with graphics cards being sold out. According to insiders, some large mining farms even directly purchase from Nvidia without going through the first or second-hand market.

For a time, the rise in graphics card prices became a topic repeatedly reported by CCTV and self-media. According to reports from institutions, in 2021, NVIDIA created approximately $3 billion in revenue by selling graphics cards to miners. In the same year, NVIDIA's market value exceeded $500 billion. In the financial report for the fiscal year ending in February of the following year, the company set a record of $26.9 billion in annual revenue, a year-on-year increase of 61%, achieving seven consecutive quarters of revenue growth.

Mining, what is its significance?

Regarding the relationship between mining companies and chip manufacturers, there are more or less misunderstandings and discrimination from the outside world. Many people question "what is the meaning of mining?" or believe that "mining machine chips are a low-end industry". However, in reality, the story behind this is much more complex than imagined.

Chinese mining machine companies have taken the lead globally, similar to the dominant position of the United States in the operating system field. However, external views are often contradictory. On the one hand, they acknowledge this fact; on the other hand, there seems to be a hint of disdain.

The orders provided by the mining industry to chip companies serve as a testing ground, which has helped the rise of chip technology. The research and development achievements of mining machine manufacturers, such as low-voltage chip technology, have been widely used in mobile phones and other industries. The contribution of the mining industry to the technological progress is evident to everyone in the industry, as demonstrated by the undeniable rescue of the current king of graphics cards, NVIDIA.

The mining industry uses the most cutting-edge chip technology and employs top-notch research and development personnel. If mining is considered "useless," then aren't many other industries the same? For those critics, everything they use should also be considered "useless."

Although mining companies may not be the entirety of Zhongxin's research and development, and may only account for a small portion, their impact is indispensable. Cryptocurrency mining companies have driven the advancement of chip manufacturers and graphics card vendors in the wave of technology, and have brought tremendous commercial value. This is the significance of mining.

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