It’s no secret that Bitcoin mining was a worthwhile enterprise enterprise final yr — however simply how worthwhile was it?

First to the Gold Rush
2017 was a particularly worthwhile yr for Bitmain Technologies Ltd., a privately owned Bitcoin mining firm headquartered in Beijing, China. In addition to working a number of of the world’s largest Bitcoin mining swimming pools, Bitmain manufactures ASIC chips and the mining that makes use of these chips. All whole, the corporate raked in someplace between $3 and $4 billion in income final yr, in response to estimates made by Bernstein Research.
By comparability, dominant GPU producer Nvidia’s working revenue was $3 billion throughout the identical interval, that means Bitmain made roughly the identical amount of cash in 2017 because the know-how trade big. Unlike Nvidia, nevertheless, Bitmain achieved their success in solely a fraction of the time – 1/sixth, to be precise. In a report revealed final week, Bernstein analysts famous:
But Bitmain achieved this in merely 4 years, whereas it took Nvidia 24 years to get right here.
How Did They Do It?
Bitmain’s speedy success stems from a number of sources of income throughout the Bitcoin mining provide chain, as proven within the following diagram from the Bernstein report:

First and foremost, the Chinese-based firm revolutionized cryptocurrency-mining by promoting application-specific built-in circuits (ASIC) able to mining Bitcoin 50 instances quicker than the competitors. The firm additionally manufactures and sells Antminer machines starting from a number of hundred all the way in which as much as hundreds of per machine.
Secondly, Bitmain operates mining swimming pools, which cuts down on mining prices by permitting miners to collaborate their efforts.
Most of the corporate’s income come from the sale of their mining rigs, however their worthwhile mining enterprise in and of itself is nothing to scoff at. According to analysts:
The relaxation [of the profits] was largely generated by mining itself and, to a a lot lesser extent, by amassing administration charges from the mining swimming pools it operates and renting out the mining energy of its mining farms via cloud providers.

Thanks to their dominance on all fronts, Bernstein estimates that Bitmain holds declare to someplace between 70 % and 80 % of Bitcoin mining’s whole market share.
Furthermore, Bitmain is unlikely to go wherever in 2018. According to the report:
In the yr 2018, Bitmain will probably lead the cryptocurrency ASIC trade and migrate a few of its chips to 10nm and probably the most superior 7nm. That will make the corporate one of many prime 5 customers of TSMC’s 7nm in 2018, with demand comparable with Qualcomm’s, HiSilicon’s, or AMD’s.
That’s some severe firm to maintain.
Are you shocked to be taught that Bitmain was so worthwhile in 2017? Do you suppose their success will proceed into 2018? Let us know within the feedback under!

Images courtesy of Quartz, Bitmain, Bernstein Research
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