After a nine-month delay and $3.8 million of investment, an upstart manufacturer is ready to produce its first batch of powerful new machines for mining cryptocurrencies ethereum and ethereum classic.
Linzhi, based in Shenzhen, China, said Wednesday it had ordered 37 wafers from Taiwan Semiconductor Manufacturing Company, the main parts that will allow it to build about 200 application-specific integrated circuit (ASIC) miners.
These sample units will test whether the machines can mine as efficiently as they are designed to do using ethash, the proof-of-work algorithm used on ethereum and ethereum classic.
The testing units, if successful, would mark a major step toward mass production as Linzhi sets out to compete with makers of general-purpose computing chips, such as NVIDIA, as well as mining gear specialists Bitmain and InnoSilicon, which both make ASIC miners for the ethash algorithm.
Roughly five million ether (ETH), the native cryptocurrency on the ethereum network, is being mined every year, which, at its current price, is worth more than $800 million. Even for ethereum classic, which maintains the original ethereum ledger from before a hard fork in 2016, about nine million native ETC gets mined every year, worth more than $60 million.
Linzhi was founded in February 2018 by Chen Min, a former chip design head at Canaan Creative, maker of the Avalon bitcoin miner. Chen told CoinDesk the new company was completely self-funded with about $4 million as starting capital.
It announced the plan to produce ethash ASIC miners in September 2018 with an ambition to beat the efficiency of most existing equipment. Chen’s target specification for Linzhi’s ethash ASIC miner is set at 1400 mega hashes per second (MH/s) with an electricity consumption level of one kilowatt-hour.
To put those figures in perspective, NVIDIA’s GTX TitanV 8 card is now one of the most profitable piece of equipment on the ethash algorithm, able to compute 656 MH/s at an energy consumption level of 2.1 kWh, according to mining pool f2pool’s miner profitability index,
With ETH’s current price ($180) and network difficulty, as well as an electricity cost of $0.04 per kWh, each GTX TitanV 8 would bring home a daily profit of $7.35. Similarly, if one uses the same GTX TitanV 8 card to mine ETC, which has both a lower price and a lower mining difficulty than ETH, the daily profit would still be around $6.70.
The total computing power racing on ethereum and ethereum classic to compete for block rewards and to secure the two networks is around 160 and 13 tera hashes per second (TH/s), respectively.
Since the announcement of its plan, Linzhi has spent almost all of its initial capital on research and development of the chip design, the operations of its dozen-person team, and the order of the first batch of wafers, to bet the sample testing units will deliver the intended mining power.
Linzhi previously said it was aiming to order the first batch of wafers around December in order to have samples ready in April and mass production in June.
Speaking of the delay, the company said:
“We underestimated the complexity of the chip and how long it would take to grow the team and make the company functional. We are cautiously optimistic that we can just move forward the rest of the schedule, which would mean 12/2019 for sample machines and 02/2020 for mass production.”
One possible risk for the business is that the ethereum community has previously voted to activate the so-called ProgPow algorithm in order to remove the edge maintained by large miners that can afford expensive, specialized chips, although the timing for that switch is not yet decided. (Eventually, ethereum developers want to transition from proof-of-work to proof-of-stake, which would eliminate mining altogether.)
When asked if Linzhi has any Plan B if the switch happens, Chen said the company is, in fact, more active in the ETC community, adding:
“Our plan A is to focus on ETC mining. So if ETH will still be an option, that’s something good to have. In the ethereum community, the ProgPow plan still has some uncertainty. For the time being, we don’t see it as a market that we will obtain, so I don’t really care that much.”
In an arguably counterintuitive move, Chen said the company plans to adopt what it calls a “reverse discount” strategy when it starts to take in pre-orders if sample units prove to be successful. That would mean the more you buy, the more you are likely going to pay.
The reason is to discourage any single entity from buying too many machines and thus concentrating power over the network.
While Linzhi has not yet decided on final pricing for each unit to be sold at pre-orders, it says the goal is to achieve a payback period of four months for individual miners with a relatively small number of orders.
“This is our efforts and contribution to the idea of decentralization,” Chen said, concluding:
“Our sales will go to developers and community first, with a focus on geographical distribution, and potentially with a malus [reverse discount] for large orders. This means that small orders by individuals would be priced to hit the 4 month [return of investment] and larger orders would pay more.”
Telegram’s new blockchain project will be compatible with ethereum, according to a tech startup building tools for the network.
The messaging company is expected to release the code to run a node on the Telegram Open Network (TON) on Sunday, allowing users to trial its project in advance of the project’s expected mainnet launch on Oct. 31.
TON Labs, a tech startup helmed by investors in Telegram’s token sale, is building a number of tools for developers to help them build on the new network. One of these tools will be a Solidity compiler, which will allow decentralized applications built for ethereum to also run on TON, said TON Labs CEO and managing partner Alexander Filatov.
Filatov told CoinDesk:
“That was probably the most difficult thing we built. It will allow the advanced Ethereum community to pull everything they wrote for ethereum into TON.”
The compiler has been in testing since July, he said.
As mentioned, TON is expected to launch by Oct. 31. If it does not, Telegram will have to refund investors in its token sale, according to its user agreement. Sunday’s release, therefore, is expected to be the last in a series of testnet releases.
Filatov said Sunday’s code release will be the most important stage of TON’s rollout, saying:
“We have very little time between the node release and the mainnet launch to test, identify and fix possibly bugs and vulnerabilities.”
Code for a light client was shared with investors earlier this year and immediately leaked to the general public. Filatov said this client allowed users to play around with some of the TON blockchain’s basic functions.
“You can play with GRAMs [the network’s token], write a simple smart contract talking to the node via a light client [and] create a wallet,” Filatov said.
Telegram raised at least $1.7 billion in 2018 for its hotly anticipated blockchain. The six-year-old messaging service claims to have over 200 million active users.
Ethereum could become the first public blockchain on Hyperledger – if the open-source consortium’s technical steering committee approves a proposal to adopt the ConsenSys-backed Pantheon project.
Pantheon is a suite of ethereum-based services built by PegaSys, a 50-strong engineering team at ConsenSys. The Pantheon ethereum client, built on Java, is used to develop enterprise applications with features like privacy and permissioning.
The proposal was sent out in a Hyperledger mailing list email on Aug. 8, and if it is accepted, Pantheon will be renamed Hyperledger Besu (a Japanese term for base or foundation).
The approval would bring Pantheon’s protocol under Hyperledger, joining blockchain projects like Hyperledger Fabric by IBM and Hyperledger Sawtooth by Intel.
Notably, however, Pantheon would become the first public blockchain project added to the Hyperledger umbrella, meaning the Pantheon code would be published on Hyperledger’s proprietary GitHub page and open to contribution from developers already involved in the project.
Patheon runs on the Ethereum public network, private networks and test networks such as Rinkeby, Ropsten and Görli.
The new proposal comes as Hyperledger enterprise blockchain competitor R3 announced last month that it was on a hiring spree, expanding its London office and opening a second engineering hub.
The World Bank has issued a second round of its landmark blockchain bonds.
The international financial institution raised another $50 million AUD ($33.8 million U.S.) by selling the “blockchain-operated debt instrument” (bond-i), according to Commonwealth Bank of Australia (CommBank), which managed the sale jointly with RBC Capital Markets and TD Securities.
Both new and existing investors participated, CommBank said.
All told, the World Bank has issued $160 million AUD ($108 million U.S.) of these bonds, which run on a private version of the ethereum blockchain. It is “the first bond created, allocated, transferred and managed through its life-cycle using distributed ledger technology,” according to CommBank.
“We are happy to see the continued, strong support and collaboration from investors and partners,” Andrea Dore, the World Bank’s head of funding, said in a press release. “The World Bank’s innovation and experience in the capital markets is key to working with our member countries to increase digitization to boost productivity in their economies and accelerate progress towards the Sustainable Development Goals.”
The blockchain platform was built and developed by CommBank’s Blockchain Centre of Excellence.
“CBA now has tangible evidence from our first bond offering using blockchain technology and subsequent bond management, secondary trading and tap issue via the same platform, that blockchain technology can deliver a new level of efficiency, transparency and risk management capability versus the existing market infrastructure,” Sophie Gilder, head of blockhain and AI at CommBank, said in last week’s release, adding:
“Next we intend to deliver additional functionality to deliver greater efficiencies in settlement, custody and regulatory compliance.”
A year ago, the World Bank announced the first $110 million AUD (roughly $81 million U.S. at the time) issuance of bond-i.
In May of this year, the World Bank and CommBank began to record secondary market bond trading using blockchain tech.
Yesterday, ethereum celebrated its fourth birthday.
Four years ago, on July 30, 2015, the world’s first general-purpose blockchain platform went live. Called ethereum, the platform was the first of its kind to feature a Turing-complete virtual machine and native programming language able to deploy code of any algorithmic complexity.
“Before ethereum, developers had to design and write extremely complex software,” blockchain researcher Mihailo Bjelic told CoinDesk. “Ethereum introduced a generic programmable layer which abstracted this whole process and enabled developers to build decentralized applications by only writing their applications’ core logic.”
There are roughly 800 monthly active developers building on the ethereum blockchain, according to new data from investment firm Electric Capital.
“This means that the ethereum ecosystem is experimenting an order of magnitude more than almost every other ecosystem,” said Electric Capital founder Avichal Garg.
Ether prices over the last 12 months via CoinDesk data.
That said, ethereum is no longer the only general-purpose blockchain in the world, nor even the most active by some metrics. The most recent quarterly report from Dapp.comshows that while ethereum is still the first choice for developers, other decentralized application (dapp) platforms such as Tron and EOS surpass ethereum in the number of active dapp users.
That leaves many industry observers wondering where ethereum will be in another four years. Will it retain its lead as a general-purpose blockchain platform in the face of a fast-rising competition?
Eric Conner, founder of information site ETHHub and product researcher at blockchain startup Gnosis, said:
“I think in four years, Ethereum will be moving past the hardest parts of its ambitious goals around proof-of-stake and scaling. At that point, the network will be able to onboard more users and we’ll start to grow beyond the use cases we are seeing today.”
Both proof-of-stake (a comparatively more eco-friendly version of the current consensus algorithm on ethereum) and scaling are bundled into an ambitious upgrade called ethereum 2.0 that many, not just Conner, envision to be completed in the next four years of ethereum’s existence.
Said Anthony Sassano, marketing and growth lead at ethereum-based startup Set Protocol:
“I believe that ethereum will achieve the original ‘world computer’ vision within the next four years because Ethereum 2.0 will have completed its roll-out. We will have mature scaling solutions (at all layers) and we will have proper privacy solutions.”
Ethereum’s future as money
At the same time, it’s not just core bottlenecks in the technology limiting transaction throughput and efficiency that experts say will need to be resolved about ethereum in coming years. Others both within and outside of the ethereum community say in the next four years, ethereum will also have to overcome challenges associated with its monetary identity.
Yaz Khoury, director of developer relations for the Ethereum Classic Cooperative (which helps build the protocol for ethereum’s sister chain, ETC), said:
“[Ethereum] is still struggling with a monetary identity. It’s not so much a cryptocurrency as much as a dapp market and network.”
Prices for ether classic over the last year via CoinDesk data.
To this, Ryan Sean Adams, founder of another crypto investment firm called Mythos Capital, sees ethereum establishing itself as a digital currency in four years time.
“Four years from now, it’ll be obvious that ETH isn’t a utility coin, it’s money. A programmable store-of-value money,” he said. “Lending, borrowing, trading, saving. Each of these will be public protocols in the ethereum economy.”
As such, MakerDAO’s Conti thinks ethereum 2.0 and scalability challenges aren’t all that important to the immediate future of the protocol.
The continued growth of decentralized finance applications, on the other hand, is.
Mariano Conti, the MakerDAO Foundation’s head of smart contracts, said via email:
“I honestly believe that even if Ethereum 2.0 is significantly delayed, what we have right now is good enough for proper Decentralized Finance in the next three or four years. I expect more companies paying their employees streaming salaries in DAI. … I also expect (dread) the first big DeFi hack to happen soon, and this’ll be something to watch out for.”
What ethereum investors are saying
On the flip side, major investors in ethereum say they aren’t worried about how the platform will transform in the next few years. On the contrary, progress in the last four years of ethereum’s existence has only proven to cement the technology’s lead.
“Ethereum has progressed significantly in making it easier for developers to build,” said Scalar Capital founder Linda Xie. “There’s improved language, tooling and infrastructure. It’s still a work in progress but it’s much easier to build an application now than in the early days.”
Mythos Capital’s Adams estimates that close to $15 billion worth of tokenized assets have been generated on ethereum thus far. These assets will continue to snowball in popularity and generate even greater value for the ethereum platform in future years, says Adams.
“We’re also seeing a first generation of [decentralized finance] protocols [on ethereum], with $500 million locked in lending and exchange protocols over the last 18 months,” Adamas said via email. “These protocols will form the banking layer of this new open finance system.”
2019 alone has been and will continue to be an inspiring year for ethereum, said Paul Veradittakit, a partner at Pantera Capital, the oldest U.S. bitcoin investment firm which has invested in over 20 different ethereum-based startups to date.
“The Ethereum community has stayed focused during bull runs and kept faith during the crypto winter,” Veradittakit said, adding:
“That focus on building is really paying off, and the ecosystem is healthier and richer because of it. So many great Ethereum projects are set to launch this year, and it’s been incredibly inspiring to watch.”