Former Bitmain Chip Designer Competes Against Crypto Mining Titan

Ex-Bitmain chip designer Yang Zuoxing is going head-to-head with his former employer as he establishes his own startup MicroBT to launch a new line of mining chips, Bloomberg reported October 9.

As detailed in the report, after 15 months of working at Bitmain, Yang subsequently resigned from his post to start his own mining gear company to manufacture microchips which, as Yang claimed, is as good as Bitmain’s ASIC chips.

Prior to working at Bitmain, in 2001, Yang had earned his Ph.D. in mechatronics at Tsinghua and has worked with a number of firms focused on designing hardware and low-wattage chips before working on crypto mining hardware.

Reportedly, Yang’s resignation stemmed from his demand for a stake in Bitmain, which the firm’s co-founders Jihan Wu and Micree Zhan subsequently turned down. A month after leaving the company, Yang established his own firm MicroBT after managing to raise $22 million worth of funds from a number of individual investors.

Currently, Yang is negotiating with several Chinese venture capital firms to raise more funds and is also looking into filing for an Initial Public Offering (IPO) in 2019.

As it stands, MicroBT is facing tough competition, given the market’s forecasted growth, which is expected to multiply five-fold to $17 billion by 2022, according to growth consulting firm Frost & Sullivan.

Last year, Bitmain commanded over 75 percent market share, but with the rise of new competitors like MicroBT introducing their own line of products, it may not be long before the crypto mining Goliath loses its dominance in the market.

As Yang argued, MicroBT is not involved in any way with any particular cryptocurrency, as opposed to Bitmain, which is known as a major holder and a vocal proponent of Bitcoin Cash.

Earlier this month, Bitmain has filed a preliminary listing application for its IPO in Hong Kong, disclosing a $103 million impairment of its digital assets, as its price has since lost over 88 percent of its value during the first half of 2018.

As Sanford C. Bernstein analyst Mark Li surmised, Bitmain’s dominance in the market may not be sustained for long, given the emergence of a number of competitors and the fact that the company has recently taken a $253 million write-down on unsold inventory.

Yang touted that “MicroBT’s flagship Whatsminer M10 can deliver better power efficiency than Bitmain’s S9i,” adding that “MicroBT is working on upgrades to stay competitive as Bitmain rolls out new products.”

As Yang further underscored:

Their technology is great. But ours is too.”

Concomitant with the anticipated growth of the crypto mining industry in the next several years, a number of startups have also emerged recently, offering better technologies. Unless Bitmain keeps innovating consistently, at this rate, its monopoly over the market may not last much longer.