Samsung Begins 3-Nanometer Chip Production – Bitcoin Mining Will Decarbonize XXL in the Coming Years
The impacts will be massive.
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At the end of June 2022, Samsung announced that it would begin production of 3-nanometer microchips. This major technological breakthrough will reduce the CO2 emissions of the Bitcoin mining industry in the long run.
Samsung claims that the new etching process is 45% more efficient in terms of power consumption. In addition, the performance of these new chips is claimed to be 23% higher. Samsung even talks about 30% with the second generation.
Even better, the South Korean conglomerate will tackle 2 nm chips by 2025. This bodes well for the energy efficiency of Bitcoin mining. The latter quantifies the performance of a machine used for Bitcoin mining. The efficiency ratio is usually calculated as follows:
Energy efficiency = Watts/Terahash
Watts represents electricity consumption.
Terahash represents the number of hashes.
The lower this ratio, the more efficient the machine. For example, the Whatsminer M20S (2019) consumes 3,360 Watts per hour and generates 68 TH per second. Its energy efficiency ratio is, therefore:
3360 Watts/68 Terahash = 49
For comparison, the energy efficiency of Bitmain's first Antminer U1 (2013) was 1250. Worse, the ratio of lambda PC processors used in the early days of Bitcoin in 2009 was 877,000 ...
The best ASIC currently on the market is the Antminer S19X which most certainly uses 5nm chips. Its energy efficiency ratio is 21. That is a 58-fold increase in energy efficiency in just eight years. The ASICS manufacturers do not reveal the type of chips they use, so I have to rely on assumptions, hence the ‘most likely’.
The excellent site minerdaily offered the comparison at the end of 2021 via an estimate they made of the various Antminer models:
It is interesting to note that the models do not have the same number of chips. For example, an Antminer S9 contains 189 chips, while an Antminer S19 Pro contains 342!
The Bitcoin mining industry continues to move in the right direction
The Bitcoin Mining Council anticipated at the end of the first quarter of 2022 that efficiency will increase by a factor of six over the next eight years. Samsung's new chips already promise an energy efficiency ratio of around 15. Over this period, there will be two halvings, in 2024 and 2028 respectively. The rewards offered to BTC miners will be divided by four. In other words, the least efficient miners will have to throw in the towel.
Miners with free electricity will obviously be able to keep going as long as their machines are in working order. But the juice has to be renewable, and no one wants it. This is the case near hydroelectric dams.
Soon, third-generation miners (before the S9) paying more than one or two cents per kilowatt hour for electricity will no longer be profitable. These miners will have to be shut down, which in turn will decrease the total energy consumption of the Bitcoin network.
All in all, improved chips, temperature control software, cooling techniques, etc., as well as the Bitcoin Halvings, promise a 24-fold reduction in the energy consumption of the Bitcoin network. In concrete terms, the value of BTC would have to increase by a factor of 24 over the next eight years for the energy consumption of the network to increase.
In the meantime, the Bitcoin network consumed 25% less energy at the end of the first quarter than it did a year earlier. This trend will continue until the value of BTC is high enough to entice new miners to join the network.
For the moment, miners are rather disconnecting machines given the current Bear Market. Some mining firms are even forced to sell a substantial portion of their Bitcoin inventory to pay off their debts, not to mention amortizing the machines. More than $4 billion in loans are currently at risk in the sector.
According to data from Blockchain.com, the Hash Rate, which was still at 266 EH/s on June 8, 2022, fell below 200 EH/s on Friday, July 15, 2022:
We are at the lowest point since February 2022.
Bitcoin miners are caught in the middle of the energy crisis and the falling price of Bitcoin. Those unwilling to look for carbon-free electricity are selling off their BTC units, adding downward pressure to BTC/USD at the worst possible time. A lesson that some players in the industry will definitely have to ponder in the future.
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