Growth history of two mining superpowers in China

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The bitcoin and crypto mining industry is a trillion RMB market in China, yet it is dominated by only two men – founders of top 2 miner manufacturers, Jihan Wu of Bitmain and N.G. Zhang of Canaan Creative.

These two men, their path of fate once intersected and competed in the same lane, yet now they have departed their ways to two destinations.

Jihan Wu never compromises and promotes his business out of the box. By doing so, he become the biggest player in miner chips.

N.G. Zhang, on the other hand, has chosen the orthodox way, walking down the path toward an IPO.

 

Chapter 1 – The beginning

N.G. Zhang was still a student in Beihang University living in boredom. He had watched 500 Japanese animations in a year, becoming a typical anime Otaku. But things changed dramatically when bitcoin entered his life in 2010.

The fantasy of bitcoin has got him deeply attracted. And the news of a young talent called Kaomao has successfully developed a FPGA chip for bitcoin mining and started raising money to build more helped him made his mind to build his own chips.

Soon after, he showed his FPGA miner – Icarus and Lancelot on bitcointalk with ID ngzhang.

NGZ

Both names are taken from Japanese animations.

Later, he met difficulties on ASIC chip development. He asked his mentor in college for a year’s leave to work on that. However, his mentor denied his request. Then, 29-year-old Zhang made one of the biggest and most rebellious decision in his life – dropping out of college.

After leaving college, he finally made his ASIC chip for miners and named it Avalon – the best defensive weapon in a Japanese anime called Fate. For N.G. Zhang, miner chip is not only a business, but also a weapon to stop bitcoin from centralization.

Avalon miner is well received among the community. And one of the buyer who can’t get the chance to purchase one is the 28-year-old Jihan Wu. It is so hard to buy an Avalon, that Wu decided to make a miner of his own.

He partnered with his friend Ketuan Zhan, and offered him 60% of company share if he can develop their own chips. And he named his company Bitmain.

Ant miner S1 was built in 2013, and it is the very first miner Bitmain has produced.

 

Chapter 2 – Departure

In the end of 2013, as regulation on bitcoin was tightening up, bitcoin price plummeted and the fantasy of bitcoin bubble has burst. It marked the beginning of a 3-year bear market for bitcoin.

Both N.G. Zhang and Jihan Wu have just entered this field and they were deeply bothered by the situation. N.G. Zhang is more like an IT nerd, he is obsessed with the technical details. While Jihan Wu, is a typical businessman.

He believed that the depression for crypto prices is an opportunity for crypto mining market. He did what he believed in since 2014.

Bitmain has launched four versions of ant miners in 2014, form S2 in April to S5 in December. In August, 2015, Bitmain has launched ant miner S7 embedded with BM1385 chip which marked a milestone for Bitmain.

Ant miner S7 was very well received and the hashpower of bitcoin has surged because of the hot-sale of S7.

With the help of S7, Bitmain built its dominance in bitcoin mining industry. They made a 400 million RMB profits out of S7 sale. All these happened in the bear market.

When the bitcoin winter ended, Jihan Wu has become unstoppable and only N.G.Zhang can keep competing with him.

Jihan Wu’s journey did not end here. His ambition is much bigger. Bitmain has gained much hashpower in bitcoin network through different mining pools around the globe. Bitmain launched Antpool, BTC.com and invested in ViaBTC, with these three mining pools, Bitmain has mastered 49.6% of the total hashpower of bitcoin network.

POOL

It means Jihan Wu can easily launch a 51% attack on bitcoin network.

The creation of BCH is a reflection of his dominance in bitcoin community.

N.G. Zhang recovered from bear market as well and led his Canaan Creative in a different path, a more pragmatic path. Canaan Creative tried to get listed in Shanghai Exchange as a chip designer. But that path is not an easy one for them.

In the end, Canaan decided to IPO in Hong Kong and that’s what they are working on now.

 

Chapter 3 – Rebellion and Submission

“Will Bitmain go public and do an IPO?”

Jihan Wu was asked by such a question in an interview in 2015. He did not offer a straightforward response. What he said then was “We have a long-term expectation for cryptocurrency on improving people’s lives.”

Rumor says that Jihan Wu is planning on build a center bank for cryptocurrency in Africa and use it to offer financial helps to blockchain startups. Bitmain is trying to reshape the world with cryptocurrency.

Canaan Creative chose a different path and focused on the manufacturing. Aside from miner production, they basically had nothing to do with crypto community. They are more like obeying and protecting the current rule of the financial world.

Today, decentralized blockchain community has become a totally different thing from early days and is extremely centralized. Someone says it is an inevitable transition for blockchain and an ultimate decentralization will come in the end. But is it true? Only time can tell.

 

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Zarc Gin is an analyst for Warp Speed Fintech, a Fintech, especially InsurTech-focused Venture Capital based in China.

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