Bitmain reveals new high-power Equihash miner

It's easy to forget that a miner manufacturer's profit margins are baked into mining profitability thresholds.

On 18 March Bitmain revealed the Antminer Z11, an Equihash cryptocurrency miner it claims has three times as much hashing power as the previous generation Antminer Z9. Bitmain also adds that the machine's energy efficiency is improved, reducing electricity costs by around 60% per hash.

It also claims the Z11 offers improved heat dissipation and comes in slightly lighter than the Z9, at 5.4kg.

Mixed feelings

It's a significant improvement over the previous generation which, counter-intuitively, comes as a mixed blessing for Equihash miners. On the one hand, more high-powered, faster machines mean more opportunities to boost profits for miners.

On the other hand, it greatly hurts the value of the machines the miners already have and means they almost have to fork out the money to upgrade their old machines lest they get left behind by the competition. For the miners who have yet to recoup their investment from the Antminer Z9 Mini and Antminer Z9, this may be very unwelcome news.

It's hard to tell how many miners are in this boat given how much variation there can be in mining profits, even with the same machines, but there are probably quite a few. This is especially likely given how frequently vastly improved new models are hitting the market.

The Antminer Z9 mini was released around May 2018 with a hashing power of around 10,000 Sol/s (solutions per second). Then the Antminer Z9, which packed an estimated 40,000 Sol/s on average, was announced in July. Now the Antminer Z11 comes out with some 135,000 Sol/s.

Somewhere in the margins

The nature of cryptocurrency mining requires miners to invest heavily in the latest gear even under tight margins. Mining rewards are generally tied directly to competitiveness, as measured by hashrate. This means anyone who lets their mining power stagnate as network hashrate increases will fall into the red fast.

By the nature of the economics underpinning the system, mining machines don't have much longevity and the most profitable option for manufacturers might be to stagger incremental improvements rather than shoot for large updates. But new machines aren't cheap. Along with the ongoing electricity bills, those upfront machine costs are one of the main factors for aspiring miners to consider when working out whether they can turn a profit.

If miners can't turn a profit, hashrates drop and networks gradually get more centralised around the most efficient handful of participants. As such, the mining profitability threshold is worth considering when looking at overall network health.

But as this example shows, the profit margins of manufacturers like Bitmain are baked into the mining profitability thresholds, which may have long-term economic impacts on network health beyond what's currently visible.

Disclosure: The author holds ETH at the time of writing.

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