Bitcoin (BTC) mining has undergone significant changes over the years due to the increasing popularity of cryptocurrencies. Despite the expansion, ASIC devices — which stands for application-specific integrated circuits — continue to dominate the field in terms of efficiency, speed, and energy consumption in BTC mining.
Specifically designed for Bitcoin’s SHA-256 hashing algorithm, ASIC miners can perform hash calculations much more efficiently than general-purpose processors, leading to successful mining operations. The availability of ASIC devices for commercial use dates back to 2013, with Chinese Bitcoin pioneer Nangeng ‘NG’ Zhang often credited with releasing the first operational Bitcoin ASIC miner to the public.
NG Zhang and his company, Canaan Inc., have made a significant impact on the Bitcoin mining ecosystem, including being listed on the Nasdaq Global Market. In this interview, NG Zhang shares insights into the dynamics of the Bitcoin mining industry and introduces Canaan’s upcoming user-friendly miners.
Cointelegraph: It has been a decade since you created the first blockchain mining-specific hardware known as ASICs. How do you view the evolution of the digital asset mining industry over the past 10 years?
Nangeng Zhang: Over the past decade, the digital asset mining industry has evolved in various aspects. Firstly, there have been significant improvements in hardware performance. The initial Avalon miner had a hashrate of 66 Ghs with a power consumption of 700W. The current 15th-generation A1566 now exceeds 200,000 Ghs with a power consumption of about 3600W. Performance has increased by around 3,000 times, while energy efficiency has improved nearly 600 times.
Secondly, the ecosystem has seen substantial growth, evolving from a small community of enthusiasts in 2013 to a significant industry by 2015. Today, it has become a force to be reckoned with in the global monetary system. Our customer base has expanded from tech enthusiasts to individual and institutional investors, and even to Wall Street and publicly listed companies. Reflecting on the changes over the past decade fills me with excitement, all achieved without a central leader — credit goes to everyone.
CT: How did you conceive the idea of dedicated Bitcoin mining hardware? What inspired the creation of the original Avalon series?
NGZ: Bitcoin’s algorithm is well-suited for hardware implementation, and I believe the shift to ASICs was one of Satoshi Nakamoto’s original intentions. The adoption of ASIC-based Bitcoin mining has significantly bolstered the ecosystem’s security, allowing it to operate steadily for over a decade.
Looking back to late 2012, I assessed the situation at the time: without a quick transition to ASIC-dominated Bitcoin mining, organizations with the majority of general-purpose computing power could potentially attack the Bitcoin blockchain, leading to the failure of this social experiment. Fortunately, I successfully facilitated this transition in four and a half months.
CT: What are the most notable differences between 2013 and 2024 in terms of the mining industry and the overall crypto space?
NGZ: The most prominent change is the industry’s scale. Today, mining demands substantial investments, with continuous growth in facility size, company structure, and investment levels. I view this change neutrally — while the scale has expanded, decentralization in the form of multiple centers still represents a form of decentralization, with no significant monopolization observed. Additionally, we strive to foster the mining industry’s development through business logic and adherence to environmental, social, and governance (ESG) standards, such as our home-friendly product line and energy-efficient software and system designs.
CT: Can you discuss the evolving dynamics between institutional mining and home mining, and the factors driving these shifts?
NGZ: The barriers to entry in mining are steadily rising, making it challenging for home mining to compete with institutional mining if profitability is the sole objective. Hence, our promotion of home mining involves creating entirely new products tailored to home requirements, rather than simply repurposing machines meant for institutional use.
Key considerations include ease of use, enjoyment, and practicality. From USB hand warmer miners consuming 140W (which can warm hands when placed in front of the keyboard) to 800W space and water heaters capable of heating villas and providing hot water. Previously, these devices only converted electricity into heat, but now they can also contribute to blockchain security by outputting hashrate.
CT: What strategies has Canaan implemented to maintain its edge in ASIC high-performance computing and Bitcoin mining technology?
NGZ: Remaining at the forefront of ASIC high-performance computing and Bitcoin mining technology requires significant investment in research and development while meeting customer demands. We consistently employ cutting-edge process technology in chip design. Despite being on our 15th generation of products, innovation and enhancements are ongoing daily.
Moreover, we focus on business model innovation. For instance, some customers require hashrate but lack expertise in building and operating facilities. Therefore, we have expanded from offering mining machines to providing system solutions and even constructing and operating facilities for customers, directly selling hashrate to them. These business model innovations are vital for maintaining our competitive advantage.
CT: You recently launched the Avalon Bitcoin Miner A1566. What are the standout features of this product?
NGZ: The Avalon Bitcoin Miner A1566 is our latest generation product. While it has been on the market for some time, its performance continues to improve. Initially offering a hashrate of 185 THs, the delivered models now reach around 210 THs, with energy efficiency improving from 18 J/TH to below 17 J/TH in high-end models.
The A15 series also boasts exceptional heat resistance and durability. We have released several batches, receiving positive feedback from customers. Additionally, in response to diverse market demands, we have introduced both water-cooled and oil-cooled versions.
CT: Could you provide an overview of Canaan’s upcoming home miner and heater? What inspired this product, and how do you envision its impact on the home mining market?
NGZ: Our Avalon Nano3 series has seen considerable success, with over 10,000 units shipped last quarter. By year-end, we will introduce the Mini series, offering room heating up to 800W using our latest chips, providing a maximum hashrate of 40T.
This product is not only environmentally friendly but also meaningful — beyond converting electricity into heat, it includes mining functionality, enhancing the decentralized ecosystem while generating returns. Similar products received positive feedback years ago, but due to resource constraints and an immature market, their development was halted. With current technological and design levels, we are reintroducing this series, vastly improved from before. I anticipate that home mining products could represent 20% of the overall mining market in the future, significantly enhancing Bitcoin network security.
CT: Looking ahead, how does Canaan plan to adapt to future industry trends, and what role do you envision the company playing in shaping the future of Bitcoin mining?
NGZ: The mining industry will continue evolving in the future. As artificial intelligence progresses to AGI (artificial general intelligence) and ASI (artificial super intelligence), on a future Earth transitioning into a carbon-silicon hybrid civilization, blockchain-based digital currencies may become the universal currency and settlement system for the planet and even the solar system.
At that stage, the computational needs of artificial intelligence and blockchain mining will merge, creating a more comprehensive ecosystem. I believe our present efforts will serve as a stepping stone toward civilization’s advancement.