ASIC miners are hugely profitable machines – provided you’re the manufacturer. That’s the view of Siacoin lead developer David Vorick, who’s published his thoughts on the monopoly enjoyed by manufacturers such as Bitmain and Halong Mining. In “The State of Cryptocurrency Mining”, Vorick also accuses manufacturers of using the machines themselves, before passing them on to the public once they’re no longer profitable.
The Absolute State of Cryptocurrency Mining
Siacoin’s David Vorick knows more than most when it comes to cryptocurrency mining. In addition to overseeing the development of decentralized file storage coin SIA, which uses a Proof of Work algorithm, Vorlick operates his own ASIC manufacturing firm. Obelisk was founded around 18 months ago, and with their first ASICs scheduled to ship in eight weeks, Vorick has decided to lay bare his thoughts on the industry. “The State of Cryptocurrency Mining” is a revelatory blog post that pulls no punches.
In it, Siacoin’s lead developer repeats claims he has heard that “Bitmain plays dirty”. Vorick was allegedly told that Bitmain would use its power to stop other ASIC companies from manufacturing in China. Despite going to great pains to conceal Obelisk’s involvement in such a deal, the Chinese manufacturer backed out suddenly in a move that reportedly cost Obelisk $2 million. There is no proof that the manufacturer was leaned on by Bitmain, but David Vorick leaves no doubt as to where his suspicions lie.
The new Obelisk SC1/DCR1 ASIC miner. ASICS Are Money Printing Machines
The most explosive part of Vorick’s blog concerns allegations of ASIC manufacturers secretly mining with new units before selling these to the public once they’re no longer profitable. These claims aren’t new, and can be traced as far back as Butterfly Labs and its ill-fated ASIC miner. David Vorick is the most senior and well-connected figure within the mining industry to go public with these allegations, however, writing:
In the case of Halong’s Decred miner, we saw them “sell out” of an unknown batch size of $10,000 miners. After that, it was observed that more than 50% of the mining rewards were collecting into a single address that was known to be associated with Halong, meaning that they did keep the majority of the hashrate and profits to themselves.
He continues: “Our investigation into the mining equipment strongly suggests to us that the total manufacturing cost of the equipment is less than $1,000, meaning that anyone who paid $10,000 for it was paying a massive profit premium to the manufacturer, giving them the ability to make 9 more units for themselves.” It has been alleged that prior to Bitmain shipping its Monero Cryptonight miners this year, an unknown entity had been mining with them for months. Vorick concurs:
My sources say that they had been mining on these secret ASICs since early 2017, and got almost a full year of secret mining in before discovery. The ROI on those secret ASICs was massive, and gave the group more than enough money to try again with other ASIC resistant coins.
At the time of the Cryptonight ASICs becoming public knowledge, a war of words erupted between Bitmain and senior Monero figures. Monero’s Fluffypony wrote that the huge leap in Monero’s hashrate in 2017 had originally been attributed to botnets using hijacked computers to mine XMR. This assertion had been revised in the wake of Bitmain unveiling its Monero-specific X3s. David Vorick adds fuel to the fire, writing: “It’s estimated that Monero’s secret ASICs made up more than 50% of