If someone were to ask you to name a company that has a huge influence on cryptocurrency at large, especially bitcoin, Litecoin, and Ethereum, a safe answer would definitely be Bitmain. But what is Bitmain? In simple terms, Bitmain is a company registered in Beijing, China that is responsible for manufacturing the vast majority of all ASIC mining devices. However, things are not quite that simple. The company is under near constant criticism from a wide variety of sources within the cryptocurrency community. Needless to say, it is highly controversial.


This article will be all about Bitmain. So read on as we dig in to what this company is about, how much power they really have, and why some people are so suspicious of its motives and practices.

Bitmain’s Core Business – ASIC Mining Hardware

Before we get too deep into Bitmain, let’s go over their core business first.

Bitmain is primarily an ASIC hardware manufacturer. They produce several lines of cryptocurrency mining hardware that are designed to target different types of cryptocurrencies including most of the popular mining algorithms. Most Bitmain devices are capable of mining multiple cryptocurrencies. For example, the S9 can mine both Bitcoin and Bitcoin Cash. This is because they share the same hashing algorithm, SHA-256.

Let’s take a look at a few of those devices available now. These are the current product lines. Some may also have a “+” or “++” in their name, indicating their generation or if the design had a recent update.

  • AntMiner S9 – The flagship bitcoin mining device.
  • AntMiner T9 – Mid range bitcoin mining device
  • AntMiner V9 – A smaller, lower hash power bitcoin miner.
  • AntMiner L3 – Scrypt algorithm mining device, for Litecoin, Dogecoin, or other Scrypt coins.
  • AntMiner A3 – Blake2b algorithm mining device, for Siacoin or other Blake2b coins.
  • AntMiner D3 – X11 algorithm mining device, for Dash and other X11 coins.
  • AntMiner E3 – Ethhash mining device, for Ethereum, ETC, and other Ethhash coins.
  • AntMiner X3 – Cryptonight mining device, originally designed for Monero, compatible with any Cryptonight coins.

In addition to these devices, Bitmain also sells a few somewhat unusual devices including a Wi-Fi router, the R1-LTC, that claims to mine Litecoin. However, the device only produces one MH/s, so you’re unlikely to see much of any results using this device. The marketing materials claim that you are essentially participating in a lottery that occurs every 2.5 minutes. This analogy is quite apt, in that not only is it like a lottery, but you’re also very unlikely to win anything. To compare, the L3++ currently produces 504 MH/s.

Supply and Demand Problems

Bitmain’s ASIC mining devices are always in extremely high demand. Typically, the devices are sold months in advance of their actual ship date. Not only that, but when the sale begins, the devices are often sold out in minutes. Most orders also have a somewhat high minimum order quantity, such as five or more devices per order.

This has led to an unfortunate effect of what is essentially scalping. For example, those who are able to buy the devices during the pre-order period for the standard retail price will then turn around and resell the devices again for double, triple, or sometimes even quadruple price. This kind of reselling may also be occurring from various buyers that are able to buy dozens or hundreds of devices at once, such as industrial-scale buyers

This obviously causes a problem. Those who want to buy the devices in earnest to mine cryptocurrency for themselves need to pay ridiculous markups in order to get the devices at all. Once you factor in electricity costs and other operational costs, the likelihood of just getting a return on your own investment is quite low for many. At today’s rates, a complete S9 with power supply would cost $1373 from Bitmain. According to the calculator, it would take around 608 days in order to break even. If one were unfortunate enough to pay triple price, it would take them an unbelievable 1826 days or five years just to break even. This is assuming no pool fees and an electricity cost of $0.10 per KwH. Needless to say, any mining hardware from five years in the past will absolutely be obsolete by the time it could even catch up.

There are many rumors that Bitmain is artificially restricting the supply of new miners that enters the market at any one time. These sorts of claims have so far gone without proof, and are currently just conjecture. However, it’s easy to see where these types of accusations come from, seeing the nearly insane prices that the devices often go for on the secondary market.

Bitmain’s Private Mining Farm

In addition to producing and selling the devices, Bitmain also operates its own massive mining farm in north-central China, in the province of Inner Mongolia. The region where Bitmain set up shop is home to one of China’s most famous “ghost cities”. A ghost city in China typically refers to a massive development that was built under the orders of the central government, but failed to attract enough citizens to justify all the infrastructure. The city in particular is, according to many reports, is well below its expected population capacity.

When the city was built, it of course had comparable electrical infrastructure built in order to support the many millions of citizens that were supposed to move in (but didn’t). For this reason, it’s conceivable that Bitmain was able to strike a deal with the local government to procure extremely low-cost electricity. Some businesses in China have even been known to acquire electricity at cost in areas that are starving for any kind of economic development.

Therefore, Bitmain was able to assemble a mass army of mining devices that operate purely for Bitmain’s own profit. Some estimates suggest that Bitmain’s mining farm represents anywhere from 10-20% of the entire bitcoin network hash rate.

The company also engages in its own cloud mining operation which it calls Hashnest. Presumably, the cloud mining operation is run from the same facility in Inner Mongolia.

Controversies and Conspiracy Theories Abound

While Bitmain does have some competitors, they still represent the vast majority of the worlds bitcoin, Litecoin, and Dash ASIC miners. They are also currently the only manufacturer of an Ethereum mining device.

Because of this near monopoly, and the fact that they operate their own mining farm, many in the crypto community have leveled allegations at the company. Let’s take a look at a few of those now.

One accusation is that Bitmain does not simply produce and sell hardware to the public. Instead, they first produce the hardware and run it themselves for several months for-profit, which gives them an incredible advantage against the rest of the network that is using much slower hardware. It is only after taking advantage of this period that they sell their devices on the open market. Further, these suspicions indicate that Bitmain only sells that batch of hardware once they already have a more advanced batch for which to use themselves and maintain their advantage.

These allegations come from a number of sources, but one in particular is from members of the Vertcoin team, who recently launched their #FairMining initiative on Twitter.

Vertcoin dev team member etang600 told

“We generally see ASICs as bad. Currently, ASICs are controlled by one company, Bitmain. In the past there were a few others, but a few when out of business and I think one or two made enough from sales [that they] only mine for themselves now (they don’t sell to the public).”

There is some evidence of this kind of “unfriendly” practice by Bitmain. Recently, the popular privacy cryptocurrency, Monero, did a hard fork so as to stop a new Bitmain device, the X3, from being compatible with their network. Once the hard fork was completed, the network saw an almost 80% drop in hash rate, instantly. Looking back to when this hash rate increase occurred, it can be seen that it was quite a few months before the announcement of the AntMiner X3. While this isn’t absolute proof, it does suggest that perhaps Bitmain was running Monero ASIC devices well in advance of making it available for purchase by the public. Again, however, this is still only speculation.

Another issue that Bitmain faces in terms of criticism is that they supposedly wield far too much power on the bitcoin network. Some well is steamed individuals including the notoriously controversial Cobra who wrote in a blog post that Bitmain is, in their opinion, the greatest single threat to the security of the bitcoin network. They are so much of a threat, according to the post, that nothing short of a defensive hard fork to stop Bitmain ASICs would even begin to alleviate the problem.

The founder of the popular altcoin DigiByte gave a presentation last year in which he outlined that bitcoin could potentially be attacked by Bitmain through suddenly shutting off their entire mining farm. What would happen is the network difficulty would remain as high as it is now, and as such blocks could take many hours or even days to find due to the sudden loss of network cash rate. To make things worse, the bitcoin network only adjusts its network difficulty every two weeks. This means that it would take at least two weeks until the network difficulty would go down. Not only that, but bitcoin is programmed so that the amount by which the difficulty will drop is limited. Thus, it could take many months until the bitcoin network would go back to its normal processing speed of blocks every 10 minutes or so.

Because this type of attack does exist in theory, most other cryptocurrencies update their difficulty rating much more often.

In defense of Bitmain, famed commentator Andreas Antonopoulos stated in no uncertain terms that the public at large should not be afraid of Bitmain. Further, Antonopoulos said that people’s fear and suspicion of Bitmain is largely tied to the fact that it is a Chinese company. He claimed that if Bitmain were a Swedish company, that the public would have no fears of them at all, suggesting that those who fear Bitmain may in fact be racially or culturally motivated. This, so far, appears to be largely the opinion of Antonopoulos only, and many do not appear to agree with his assertion.

Does Bitmain deserve all the suspicion?

Bitmain currently serves an important purpose in the cryptocurrency community. Their devices are arguably what keeps the bitcoin network and other networks so secure due to the incredible hash rate that their devices produce. However, there are many legitimate arguments against both Bitmain and ASIC mining in general, including suggestions that ASIC mining results in inevitable centralization which can create many inherent risks.

So far, the suggestions that Bitmain is engaging in arguably unfair practices are so far unfounded and without absolute proof. Conversely, there is also no proof that Bitmain is not engaging in such practices.

In the end, we need to consider that Bitmain is both potentially harmful and helpful to the community. Secondly, if Bitmain and its founder Jihan Wu hadn’t created the company, then someone else (most likely in China, for a number of logistical reasons) would have certainly done so by now.

Secondly, Bitmain’s current near-monopoly will likely end fairly soon as a number of other major players have released statements indicating that they are going to get involved in the cryptocurrency mining game, such as Intel and a major manufacturer in Japan that claims to have access to superior chip manufacturing technology. As for whether or not Bitmain is a nefarious actor in the cryptocurrency scene, that largely depends on one’s own personal opinion of them.

Posted by Robert Devoe

Robert is based in Shanghai, China. A true believer in the freedom, privacy, and independence of the future digital economy, he has been involved in the cryptocurrency scene for years.

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