Today, Stockholm-based KnCMiner, among the most successful Bitcoin mining rig manufacturers in the world, announced it was starting up a backup plan to protect customers in case deliveries of its 20-nanometer “Neptune” machine came in behind schedule.
We profiled KnC late last year after they demonstrated the fastest machine on the planet.
But for Dan Murtha, co-founder of MinerSource.net, a bulk buyer and distributor of mining hardware, KnC’s announcement is a sign Bitcoin mining rig power may be plateauing.
Reminder: Bitcoin miners “mine” by unscrambling encrypted bits of information. This is an insanely resource-intensive process: At more than 40 petahashes, the collective computing power of all Bitcoin mining machines in operation is now hundreds of times greater than the 500 most powerful supercomputers combined.
That of course has raised some moral issues about whether all that power could be better used.
And some like the St. Louis Fed’s David Andolfatto think “mining” is a misleading term because, they are not simply wildcat-type speculators but rather the backbone of the entire Bitcoin network. The bits of information the miners unscramble are in fact confirmations of successful Bitcoin transactions.
Still, depending on the price of Bitcoin and the size of one’s investment, it is possible to get a decent return, although there is a movement underway to start renting out computing power to customers.
But for Murtha, it’s clear there’s not much more room to go in terms of engineering ultra-small — and therefore ultra-powerful — computer chips, despite the incredible leaps Bitcoin mining engineers have made to this point. It’s not just KnC, he observes: There is also a report Intel has been experiencing delays on drilling down to 14-nanometers.
“We’re reaching the limits where we have Intel, the largest chip manufacturer with the deepest pockets — they’re now having to delay their [14 nm] Broadwell chip,” he told BI at the InsideBitcoins conference Tuesday. “If they’re not able to do 14 nanometers, I’m not sure if an ASIC [Bitcoin mining] machine can beat Intel. So I think we’re going to hit a plateau of 28 or 20 [nanometers].”
It will take some time for the computing rate on the Bitcoin network itself to start flattening out, since it’s determined by an additional set of cost inputs that reflect the absolute number of miners in the system. So things like lower chips production costs, higher bitcoin prices, and greater investment could cause the line in the following chart to keep rising.
But from an engineering standpoint, it seems clear things are, for now, slowing down.