How Bitmain’s Antminer Climbed On Top Of The Bitcoin Mining Hardware Industry
Bitmain is the clear winner of the mining race, the Chinese company earned $2.5 billion in revenue in 2017. Bitmain’s products are superior, their ASIC miners require less power and achieve greater hash rates, ultimately resulting in higher profits. It’s not a surprise that savvy miners, mostly motivated by profit, have opted for the equipment that achieves the highest return on investment. Bitmain’s hardware business combined with their ownership of the largest mining pools in the world has given Bitmain the power to influence and effectively control the Bitcoin network.
The company’s Antminer line is consistently ranked among the best Bitcoin mining hardware available. This secretive Chinese company has managed to secure their position through a combination of tactics which include strong positioning and consistent development of their product line.
In this article, we will take a close look at how the mining giant was able to climb to the top in such a competitive era.
Bitmain is taking in huge profits every quarter. Based on conservative estimates of gross margin of 75 percent and operating margin of 65 percent, the analysts calculate that Bitmain made $3 billion to $4 billion in operating profit in 2017. To put this in perspective, Nvidia's operating profit was $3 billion during the same period.
Antminer Bitcoin Mining Hardware
The huge profits collected helped Bitmain develop their Antminer Bitcoin mining hardware line into one of the most advanced miners on the market. By doing so, Bitmain has also raised the hashing power of the entire BTC network; which has increased the difficulty for miners. In turn, this has forced more miners to purchase ASIC mining rigs to stay relevant in the mining space.
The ASIC used in the Antminer line is designed to handle the SHA-256 hash code used by BTC. These advanced mining chips produce far more hashing power than GPU or CPU mining efforts. In many instances, ASIC chips are capable of calculating the Proof-of-Work 100,000 faster than their GPU counterparts. Today, you will need an ASIC mining rig if you intend on successfully mining BTC on a large scale.
An added advantage of Bitmain is that they control numerous mining pools. Mining pools are one of the best ways to start mining BTC in today’s competitive ecosystem. Unfortunately, these pools are also centralizing a large portion of the BTC network. This has resulted in Bitmain gaining even more control over the mining sector.
Conservative estimates by the accounting firm Bernstein have put Bitmain’s market share at 70%-80%. Bitmain currently owns or operates a number of the world’s largest mining pools. These include Antpool and BTC.com. The reclusive company also operates several cloud mining divisions in addition to these hardware-based mining pools.
As Antminer rigs have become industry standard, Bitmain further capitalized on their positioning by providing competing mining pools with access to their Bitcoin mining hardware in exchange for a percentage of the pool’s profits. This has been a hugely successful venture.
Bitcoin Mining Hardware Data Centers
Bitmain has championed the idea of a shared data center business structure. Anyone can rent out additional hash power form one of their centers to increase their mining capabilities. These data centers are mostly located in parts of the world where renewable or very low-cost energy is present. This is the case with their Inner Mongolia location. Bitmain is also able to increase their profits even further by positioning their data centers in these regions.